Research on risk detection and management based on machine learning

Abstract

With the rapid advancement in financial risk management, machine learning techniques are playing an increasingly crucial role in credit assessment and risk detection. They provide financial institutions with more scientific and precise platforms and methodologies for risk management. This paper explores various traditional machine learning methods in risk assessment, introduces the XGBoost ensemble learning method, and integrates traditional machine learning with Long Short-Term Memory (LSTM) neural networks to enhance the generalization capability of risk control and credit assessment models. This approach offers new perspectives and improvement directions for risk assessment standards and practices in the financial industry, affirming the potential application of machine learning technologies in future risk management.The results show that the random forest and decision tree have excellent accuracy and recall rates for distinguishing fraudulent transactions. After the introduction of LSTM neural networks, the accuracy and recall rates of fraudulent transaction recognition models reach around 99%, indicating that these models have good adaptability for fraud risk recognition.