SWE - Fall 2007 - (Page 50) Engineering BY CHARLOTTE THOMAS, SWE CONTRIBUTOR Financial engineering radically changed global financial transactions – and added a new dimension to engineering. F inancial engineering is not particularly well known, but its impact on global finances is massive. Basically, financial engineering applies high-level mathematics, engineering methodology, financial theory, and computer science to financial transactions such as investing, saving, borrowing, lending, mergers and acquisitions, and managing both individual and corporate risk. Though engineers are increasingly gravitating to financial corporations — Goldman Sachs is the largest employer of MIT’s engineering summer interns — financial engineering is not a mainstream career option. According to Jim Finnegan, editor and publisher of Financial Engineering News, “This field has been around for 10 years, yet if I talk to 100 people, only five have heard of financial engineering.” While financial engineering isn’t a common word among engineers, graduate schools are responding to the demand from the financial world. A look at the number of master’s of financial engineering programs indicates just how interested people are. Twenty years ago no financial engineering programs existed. Today there are 60 in institutions from Harvard to the University of Beijing and the London School of Economics. “In May 2005, we had 13 students,” says Jullie W. McCurdy, administrative director of Financial Engineering Management at Claremont Graduate University. “In May 2007, our program grew to 48 students from 192 applicants, and for this fall, we expect to have over 80 full-time students. Applications to our financial engineering program are up 50 percent from this time last year.” Several factors contribute to the increased numbers of financial engineers: drastic 50 SWE FALL 2007
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