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Financial - Engineering

Financial engineering is a multidisciplinary field relating to the creation of new financial instruments and strategies, typically exotic options and specialized interest rate derivatives. The field applies engineering methodologies to problems in finance, and employs financial theory and applied mathematics, as well as computation and the practice of programming; see computational finance.

 Despite its name, financial engineering does not belong to any of the fields in traditional engineering. In the United States, the Accreditation Board for Engineering and Technology (ABET) does not accredit financial engineering degrees.

 Financial engineering is also the process of creating new securities or processes, and designing new financial instruments, especially derivative securities. More importantly financial engineering is the process of employing mathematical, finance and computer modeling skills to make pricing, hedging, trading and portfolio management decisions.

To become a financial engineer, one must have a strong understanding of financial economics, mathematical tools such as probability and statistics and differential equations, as well as have engineering principles such as software engineering


Financial engineering is normally employed in the securities and banking industries. It is also used by quantitative analysts in consulting firms or in general manufacturing and service firms, in corporate treasury, corporate finance and risk management roles. Financial engineers will often hold doctorates in computer science or mathematics, although, increasingly, have instead completed a specialized (terminal) masters degree - usually the Master of Financial Engineering, or the more general Master of Quantitative Finance.