Thread by @SAH16928046

What are the future opportunities if I start my career in Financial Computational Modelling?
@CQFInstitute @CFAinstitute @GARP_Risk @PRMIA
Financial Modeling has many connotations. Modelling on Financial Variables is FM - Financial Modeling.
However, a model has many variants.

Please do read Dr Emanuel Derman, if you are interested in analyzing and understanding the computational (quantitative) methodology that taxonomizes model and model risks.

•Financial Modeling in Risk takes on various forms such as Econometric Modeling/ Volatility Modeling and so on etc.

•FM in Equity research is a structural analysis of the business and financial model of the company in which you would like to invest.

•FM in Retail Banking implies Credit Risk Modeling.
But it is not limited to Credit and can take on various forms.

•FM in Investment Banking is Quantitative Modeling used for pricing New Issues via the IPO in the primary market, and further valuation and pricing of the asset classes in the secondary markets.

•FM in Financial Engineering is Stochastic Modeling.
How Stochastic Processes are used to price and hedge financial positions in exposures such as derivatives.
•FM in Operations Research is based on Optimization Models. An e.g. is Portfolio Optimization.
•

FM in a true Accounting sense could be anything from costing to pricing to management reporting using dashboards.

•FM in Data Sciences revolves around Linear or even Non - Linear Model building, exploratory tests, inference validation and data visualization using various software, programming tools and computing packages.

•FM in Insurance has got to do with the fair actuarial pricing of the insurance premiums, Portfolio Management, Risk Event Outcome Analysis, ALM - Asset Liability Management and management of claims. It draws a lot from Actuarial Science and the Methods used in Insurance

•FM in Inventory, logistics and supply chain management can become very quantitative indeed.
There is a wide range of variables and models that are being used to optimize production and operations management activities in the batch manufacturing sector.

•FM in Economics, Esp: Financial Economics, revolves around Time -Series Econometrics drove Forecasting Methods.
For e.g. the financial modelling on equity returns and so on etc.

•FM also has a scope in Marketing Research and New Product Development by undertaking stochastic and deterministic simulations to assess the feasibility of the change management led process.

•Generally, MBAs have limited Financial Modeling skills outside the Supply Chain and/or Marketing Research and/or Banking and /or Investment Management Industry.

•The industry normally likes to hire Data Scientists, Actuaries and Financial Engineers to build sophisticated Financial Models.
In the future FM using MACHINE LEARNING applications will lead this analytical profession in the Industry.

The role of human interference might come to an end as far as computing is concerned. However, the interpretative side will always create and accommodate human beings, because programs can throw up and number, but the decision needs to be monitored through a Non - Robotic Process

I would feel very uncomfortable if robots are going to take over everything.

So make sure you pick the right area after doing a relevant degree in Financial Analytics, Machine Learning, DS, Financial Engineering, Actuarial Math, Applied Statistics, Economics, or Computing, etc.

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