A Decision Tree Algorithm for Financial Risk Data of Small and Medium-sized Enterprises

Authors: Jun Yan, Hui Liu

Abstract: With the advent of the era of big data, although enterprises have certain strategic choices in the process of active early warning of financial operational risks, the effect of financial risk early warning method is not obvious due to lack of understanding. This paper will apply the idea of decision tree algorithm to the construction of financial risk management model, give full play to the advantages of big data, and try to digitize useful information, so as to find leading indicators to make early warning of financial crisis and control risks as soon as possible. The financial risk early warning management system based on decision tree algorithm can effectively and accurately prevent the financial management risks of enterprises, and effectively avoid the possible financial management risks in the process of business development. When the decision-making problem is in multi-stage and multi-level, the decision tree algorithm can conveniently express the correlation and mutual influence between each stage decision-making and the overall decision-making. When using the decision tree algorithm, we should collect data extensively, consult relevant experienced experts and managers, and repeatedly check and modify the probability distribution, so as to provide a reliable basis for financial decision-making of enterprises.

Pages: 191-197

DOI: 10.46300/9103.2022.10.30

International Journal of Economics and Statistics, E-ISSN: 2309-0685, Volume 10, 2022, Art. #30