“My chalkboard isn't going away anytime soon!”

You need nerves of steel to work in financial engineering, a sector hit by the occasional shock wave. A big one happened in 2008 when Lehman Brothers collapsed, triggering a global financial crisis in the process – the Swiss government even had to bail out heavyweight UBS. “These events literally blindsided the finance industry,” says Filipović. But that didn’t discourage him. In fact, it had the opposite effect: “Such crises show how important it is to develop models and tools that can help financial institutions shield against these kinds of risks.”

Filipović, who holds the Swissquote Chair in Quantitative Finance, was initially drawn to the field of pure mathematics, a subject that he enjoyed and excelled in starting in high school. He obtained a master’s degree in mathematics from ETH Zurich in the mid-1990s, but felt his studies lacked an “applied side.” That’s when fate stepped in: ETH Zurich had just introduced a PhD program in mathematical finance. “I was the very first student to go through that program,” he says.

While Filipović was working on his PhD thesis, technology-driven quantitative methods were gaining traction in industries across the globe, including finance. “There was a lot of buzz around the topic at the time, a little like artificial intelligence today,” he says. But a few years later, quantitative methods went from being a fad to serving as the foundation for the systems that helped banks cope with the devastating effects of the global financial crisis. Several banks asked Filipović to speak to them about his risk analysis models and solvency tests. “That’s the applied side that I was looking for,” he says.

Once an academic, always an academic

The logical next step might have been for Filipović to cross over and take a job in the finance industry. Instead, he stayed faithful to the world of academia, devoting almost all of his 30-year-long career to teaching and research – the exception was a two-year stint at the Swiss Financial Market Supervisory Authority (FINMA). Filipović held positions at the Universities of Princeton, Munich and Vienna, before joining EPFL in 2010.

“I’m just as comfortable in industry as in academia, but it’s in the latter where I truly feel at home,” he says. “I’m lucky to work at EPFL, where we’re encouraged to transfer our knowledge to the real world, which means I can build bridges between the two.”

Filipović is also responsible for transferring his knowledge to students, which he does through the class he teaches in financial engineering. “I see myself as a fairly traditional teacher,” he says. “For instance, even though there’s a projector sitting in the middle of my classroom, my chalkboard isn’t going away anytime soon! I realize that makes me come across as an old-school mathematician. It’s part of my nature, and it’s what I’ve always done.”

Striking the right balance

Filipović doesn’t hesitate to sing the praises of his students, whom he finds “simply fantastic.” The only drawback is that “absenteeism has increased substantially since the pandemic,” which has had an impact on his lectures. “The fact that fewer students attend class doesn’t affect how I teach per se, but it means having to deal with a growing number of questions afterwards that would’ve been faster and more efficient to address directly in the classroom.”

One thing that has affected how Filipović and a number of his colleagues teach is the rise of artificial intelligence. “The models traditionally used in quantitative finance are being challenged by machine learning,” he says. In his lectures, he aims to strike the right balance between teaching the fundamental theories developed between 1980 and 2000 – which are “still very relevant” – and exploring the opportunities being offered by AI thanks to its ability to process vast amounts of data. “Today it’s especially important to make sure that students who are struggling a little with the material don’t get lost in the flood of information.”