Careers in Financial Engineering
Financial Engineering has been one of the emerging disciplines of the past decade. In the new economy, the challenges of money management are quite varied. Managers and Industry leaders have to make quick forecast and investment decisions involving millions of dollars and a wrong move might spell disaster to their organizations.
In such a fast-moving, high-risk scenario, the evaluation and quantification of risks, the measurement of risk-reward pay-offs, sound forecasting, are all very important elements towards making informed decisions. This is where a financial engineering professional steps in. Most of us would be quite uninformed about what a Finance professional does. The most common questions, to begin with, are:
- What is their function?
- Where do they stand in the organizational hierarchy?
Before diving into this question, we must first make a thorough run-through of the history of this discipline. The Financial Engineering Program is only a recent addition in American campuses. University education in the United States is structured on a very flexible basis. University department and the faculty are provided with the freedom and the autonomy to design academic programs and prescribe the courses.
This academic freedom, free from bureaucratic control and interference from non-academics, provides US educators to design the best courses in order to meet the growing challenges from Industry. The Financial Engineering program was one such answer by US educators to create skilled professionals who would have a combination of unique skills that would meet the new and growing demands of industry.
Financial Engineering program is known under a myriad of names in the US educational system. Computational Finance is one of the most used terms to represent the course. The skill sets that are imparted under the course are however similar. The program marries together the computational programming skills like C programming language with high end Math subjects like Linear Algebra, Differential Equations, Probability Theory and Statistical Inference.
Financial Engineering professionals use computer simulation models and math to make trading, hedging and investment decisions. One of the most fundamental roles performed by finance professionals is to measure and quantify risk that financial instruments like derivatives create. The cocktail of skills are very useful in fields such as trading and risk management and in strategic planning. Finance professionals also play a key role in investment decision-making and investment portfolio management.
Organizations such as Goldman, Sachs & Co. and JP Morgan, Chase & Co. employ finance professionals in there banking and finance operations. Apart from this, there are many small investment and brokerage enterprises that also require the skills of computational finance professionals.