Analysis of the Shortcomings of Financial Engineering in Traditional Risk Management Methods

Abstract

With the progress of science and technology, in order to ensure the risk management, financial engineering has emerged. Among them, the effectiveness of risk management activities is directly related to the stability of cash flow. Financial engineering broadens people's thinking and reduces the cost of investment risk. The most important thing is to prevent social and economic friction to improve financial efficiency. This article will briefly compare financial engineering and traditional risk management in the three aspects of insurance, asset & liability management and portfolio investment to analyze the comparative advantages of financial engineering.