BIG DATA

Business School Launches New Master’s Degree Track in Financial Engineering and Risk Analytics

At a time when many are shorting the ability of the global economic and financial systems to right themselves, the Lally School of Management & Technology, Rensselaer Polytechnic Institute’s business school, is “long” on finance. The Lally School will host Finance Day on April 22, 2009 from 9:00 a.m. to 4:00 p.m. The Lally School will formally launch its International Center for Financial Research (ICFR) and announce the new master’s degree track in Financial Engineering and Risk Analytics (FERA).  

Finance days are typically held when the good news outweighs bad news. But the Lally School believes now is the right time to rejuvenate interest and encourage investment in initiatives focused on rebuilding the financial industry, and ultimately, restoring confidence in the financial markets. Financial professionals, as well as business students, computer scientists, mathematicians, economists and engineers are encouraged to attend Finance Day. Discussions will explore the need presented by the global recession and financial crisis, offer an in-depth look at finance at Rensselaer and the ICFR, and feature a networking lunch. Steve Silberstein ’76, managing partner at Coastal Partners LLC, and former managing director at Lehman Brothers, will provide the keynote address.

Where many see a crisis, the school sees an opportunity. “The current crisis in the global financial system underscores the need in business and public policy for decision-makers to renew their knowledge of finance fundamentals,” said David Gautschi, dean of the Lally School. “As a society, we need to help our financial institutions broaden their understanding of new financial tools and methodologies. This has been apparent to us for a number of years.”

According to Gautschi, the robust economic expansion from 2003 to 2007 driven by excesses in the financial services industry distracted us from addressing the need to advance the understanding of finance and its connection to business creation and economic growth. “Now we are in a severe worldwide economic contraction, and our deliberate investment in finance at the Lally School is a clear indication that we believe this school will contribute to the long-term viability of the emerging new financial order,” he added.

So exactly what role does the oldest technological university in the U.S. expect to play when it comes to understanding the interrelationships of the world’s financial markets and the industry as a whole?

Rensselaer believes the rapid and systemic changes unfolding in the global financial system call for renewed attention on the basics of finance. The master’s track in FERA capitalizes on Rensselaer’s signature strengths, and is a collaboration between Lally’s finance faculty and other departments across campus including computer science, applied mathematics, decision sciences and engineering systems, and economics.

“Since its inception, the Lally School has been focused on developing aspiring business leaders who have a passion for technology, and the ability to work across business functions built around the themes of innovation and technological entrepreneurship in the global economy,” said Rensselaer Provost Robert E. Palazzo. “As our world becomes more interconnected and interdependent, solving complex problems requires the skills, drive, and imagination needed to approach life’s puzzles in more innovative ways. Tackling those problems requires both exceptional resources and curious minds. The launch of the International Center for Financial Research and new master’s degree track in FERA will provide Rensselaer students with increased opportunity to analyze and manage rapidly emerging changes in capital and financial services markets worldwide.”

Add to all of this the only international journal dedicated to understanding the elements of financial crises (Lally’s Journal of Financial Stability), a finance faculty educated at the nation’s top-ranked business schools, and one of the most powerful university-based supercomputers in the world, and this small b-school is poised to deliver the next generation of financial experts from research analysts and credit risk specialists, to portfolio managers and financial controllers.

Iftekhar Hasan, Director of the ICFR, said, “Lally is one of the best-kept secrets.  Rensselaer’s overall technical orientation and active cooperation from other disciplines within the Institute make FERA one the strongest master’s programs in the country. We hope to take advantage of the lessons learned from the current crisis to ensure that our future graduates possess the necessary skills they will need as the market recovers.”

Moving the industry forward will also require that technology keep up with the sheer volume of data and the quick pace that's required to generate real-time analyses. The profusion of capital markets, the interconnectedness of the global markets, and a deeper-than-anticipated recession have rendered current models obsolete. Rensselaer's supercomputer, capable of running massively complex computational analysis, will provide faculty researchers and students with the enhanced capability to simulate financial market dynamics, and to unravel the previously incomprehensible interdependencies of exotic financial instruments.
 
 “As societal and associated business problems become ever more complex, there is a need to develop more robust computational modeling tools and the environment for humans to interpret and steer the digital results. Risk analytics and smart agents, particularly in the area of global finance, can be data and computationally intensive. The power of a supercomputer, such as the one at the Rensselaer Computational Center for Nanotechnology Innovations (CCNI), coupled with the human sensory environment made possible within the spaces of the Rensselaer Experimental Media and Performing Arts Center (EMPAC), provides an interactive, immersive platform for the modeling and simulation of the next generation of grand challenge problems,” explained John E. Kolb, Rensselaer’s vice president for information services and technology, and chief information officer.

Gautschi added, “Clearly the finance industry is going through major adjustments, possibly systemic changes. Considering the central role of risk management in finance, pronounced need for financial expertise is emerging rapidly and inexorably in central banks, agencies and branches of governments, and in international organizations. There are new financial service entrepreneurs also beginning to appear, and together they are going to contribute to redefining the financial services landscape.”