“In teaching, unlike in research, the feedback is instant”
Rüdiger Fahlenbrach, who joined EPFL in 2009, has been named this year’s best teacher in the Financial Engineering section.
Spend just a few minutes in Rüdiger Fahlenbrach’s company and it’s clear how much he loves his subject. His eyes light up when he talks about finance and its attendant rules and risks. He enthuses about financial decision-makers and the influential choices they make. But what drew him to this field? Fahlenbrach, the son of doctors and now an associate professor at the Swiss Finance Institute @ EPFL, can’t say for certain. But he’s harbored a passion for finance ever since his days as a student at ESSEC Business School in France. So it comes as no surprise that he’s been named best teacher in the Financial Engineering for the second time.
Fahlenbrach’s knack for teaching is beyond question: his students rave about him, and his classes are always heavily subscribed. According to section director Julien Hugonnier, he was once one of the star teachers in the Fisher College of Business MBA program at Ohio State University. But Fahlenbrach isn’t the boastful type. He recognizes the importance of humility and works hard to keep his classes fresh and engaging. “In research, two years can easily pass between starting the work and getting it published,” he says. “But in teaching, the feedback is instant.”
Promoting public speaking
Fahlenbrach, who hails from Germany, holds a PhD in finance from the University of Pennsylvania and specializes in corporate governance and entrepreneurship. After ten years in the United States, he was keen to return to Europe. So when a vacancy opened at EPFL in 2009, he grabbed the opportunity with both hands. A keen proponent of American-style teaching, he encourages students to interact, speak their minds, defend their ideas, and learn through a process of trial and error. He applies those same principles to the two Master’s classes he teaches at EPFL, and to the PhD classes he co-teaches with a colleague from the University of Lausanne.
Fahlenbrach introduces first-year Master’s students in Financial Engineering to topics such as financial markets, decision-making models and risk management. “It’s challenging at first,” he says. “The students have an engineering background and most have never taken classes in finance before.”
He starts every class by drawing parallels between theory and current affairs, before giving students hands-on group exercises where they get to apply what they’ve learned to “real-world” business and corporate situations. For example, should the football club Tottenham Hotspur build a new stadium? Buy a new player? Or both? “The students learn how to make financial decisions,” he explains. “They then have to explain and defend their decision to the rest of the group. It gives them a taste of what to expect in their future careers. Because in finance, there’s no right answer. It’s also important that they practice public speaking – something they rarely have a chance to do during their time at EPFL.”
Adressing ethics and responsibility
Fahlenbrach, who has extensively researched the causes and effects of the 2008 financial crisis, devotes part of his class to ethics and responsibility. For instance, he asks students to put themselves in the shoes of a junior trader who’s been instructed to fax inaccurate information to a client. The exercise touches on the differences between legality, business ethics and personal ethics, and demonstrates why ethical behavior is so hard to define. He covers similar topics in his Master’s class on venture capital, where students asked to learn more about impact investing – a strategy whereby investors look to generate a measurable and beneficial social and environmental return alongside a financial return.
Although his venture capital class was originally designed as an optional module in the Master’s program in Financial Engineering, more and more students from other sections are signing up. That’s a welcome development for Fahlenbrach, who believes business skills can benefit students outside the narrow confines of finance. “The class provides an overview of the venture capital industry,” he explains. “Students learn how to negotiate like entrepreneurs. For instance, one of the topics we cover is term sheets (a document setting out the terms of an investment).”
As a champion of innovation, Fahlenbrach also sits on the committee of Innogrant, an EPFL innovation fund that provides grants to forward-thinking entrepreneurs. He’s keen to see the Swiss startup scene continue to thrive and hopes that more and more EPFL students will become entrepreneurs.