The interdisciplinary Centre for Financial Innovation and Risk Management (CFIRM) was founded in 2013 to improve our understanding of the role of financial institutions and financial innovation in shaping the nature of the risks being faced by corporations and other economic entities operating in global markets. Much of the blame for the 2008 Global Financial Crisis has been placed on an insufficient understanding of the consequences of the rapid advances in financial innovation. The complex mathematics behind the new products developed to either manage risk or provide better returns to investors within the existing regulatory constraints led to products being offered throughout public and private financial markets despite not being well understood by economists and financial professionals.
The 2008 Global Financial Crisis emerged from a complex set of factors, and scholars and analysts have pinpointed financial innovations and changes in strategies for risk management as two of the central dynamics which precipitated instabilities in the financial services industry, and consequently the global economy. Financial firms are constantly advancing and modifying strategies for investment using sophisticated mathematical models, and these financial innovations have had significant effects on the operations of the international economy. Whereas the development of new financial models has been identified by subsequent research as one of the most significant causes of the 2008 Global Financial Crisis, there has not been a concentrated effort to encourage, coordinate and consolidate the academic, professional, and regulatory resources which are necessary for adequately understanding the role of financial innovations in the crisis and for ensuring that proper measures are taken to reduce and manage the risks which come along with these innovations.
There are significant opportunities offered by an interdisciplinary Centre in Financial Innovation and Risk Management in Financial Institutions. For our faculty, students, the broader university community and practitioners, the Centre provides increased opportunities to cross-fertilize and expand our research capabilities while improving our integration into the top tiers of research in these areas around the world.