Risk Management and Financial Engineering

Topics Covered

In this major you will learn about derivatives markets and how instruments such as futures and options can be used for risk management. You will learn about risk management from a) the perspective of a corporate treasurer who is interested in hedging his or her exposure to interest rates, exchange rates, commodity prices etc. b) the perspective of a fund manager who wants to change the nature of his or her exposure to financial markets, and c) the perspective of a financial institution that trades derivatives and is faced with an increasingly complex regulatory environment. You will also learn how to price a wide range of derivatives instruments. While the major will not convert you into a "rocket scientist" it will provide you with the tools to successfully interact with rocket scientists and understand their ideas and conjectures.

"Stocks that enjoy big unexplained jumps in value do considerably worse in the long term."

- Hai Lu, an associate professor of accounting at Rotman, in an online article

Requirements to Complete

For 2020-21, you must successfully complete 3 of the the following core courses:

Core Courses

• Risk Modelling & Financial Trading Strategies
• Options and Futures Markets
• Advanced Derivatives
• Financial Risk Management
• Machine Learning and Financial Innovation

It is also recommended that students in this emphasis choose other courses from the following selection:

• Security Analysis & Portfolio Management
• Financial Institutions and Capital Markets
• Analysis & Management of Fixed Income Securities
• How Banks Work: Management in a New Technological Age 

Career Paths

Many banks have recruited large numbers of "quants" in recent years but have not developed the managerial infrastructure to use those quants effectively. The risk management and financial engineering major will equip you well to be part of that managerial infrastructure. It will also give you the tools necessary to join groups concerned with structuring complex products that meet the needs of particular clients. Some past MBAs are now involved in the sales and trading of particular derivatives products. Regulators are requiring banks to use increasingly complex models to evaluate market risk, credit risk and operational risk. The risk management and financial engineering major will enable you to understand these models and play a key role in the development of a bank's strategy for minimizing its regulatory capital requirements. More generally, it is true that derivatives markets (particularly the over-the-counter derivatives markets) are becoming increasingly important to everyone who works in finance. Even if you do not plan to work in a risk management/derivatives function you will find the material you learn from this major useful.

Typical Roles in risk management and trading include:

• Analyst, Capital Markets Risk Management
• Content Development Specialist
• Quantitative Risk Manager
• Credit Risk Analyst
• Financial Engineer
• Research Associate
• Regulatory Operations Analyst
• Corporate Investment Bank Advisor  

Flexible Internship Program

The Rotman Full-Time MBA Program provides a unique opportunity for students to integrate and apply management knowledge gained within the program through a 4-month internship. Students are required to complete the course “Applied Management: Placement” in conjunction with a work placement which may be done in the Summer, Fall or Winter terms. Depending on their academic area of concentration/major and career objectives, students will be guided on the best work term option to secure a placement with an employer. Throughout their work placement, students will benefit from enhanced communication with their host employers, tracking of project deliverables and feedback from faculty supervisors.

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