1-Art to Engineering Page 19 Wednesday, February 4, 2004 12:38 PM
From Art to Engineering in Finance 19■ Changes in the investment management business are being driven by
the explosion in the universe of investable assets brought about by glo-
balization, investors, and especially institutional investors and their
consultants, pressure from regulators and the media, and the sheer size
of the markets.
■ Given the size, diversity, and efficiency of modern markets, a more dis-
ciplined process can be achieved only in a quantitative framework.
■ Key to a quantitative framework is the measurement and management
of uncertainty (i.e., risk) and financial engineering.
■ Modeling is the tool to achieve these objectives; advances in informa-
tion technology are the enabler.
■ Unstructured textual information is progressively being transformed
into self-describing, semistructured information, allowing a better
structuring of the research process.
■ After nearly two decades of experience with quantitative methods,
market participants now more clearly perceive the benefits and the lim-
its of modeling; given today’s technology and markets, the need to bet-
ter integrate qualitative and quantitative information is clearly felt.