In collaboration with a European hedge-fund, Imperial College London has launched a new research partnership to model risk in financial markets.

The global financial crisis has underlined the need for a better understanding of market failures and risks. A key focus of the Institute will be on new quantitative approaches for modelling and managing risk, blending the academic and market expertise of the two partners.

Capital Fund Management (CFM) and the Department of Mathematics at Imperial have joined forces to create the CFM-Imperial Institute of Quantitative Finance, which will promote new approaches for understanding and managing risk in financial markets.

The institute will be funded by CFM, the Paris based hedge-fund that manages $4.5 billion.

The institute will fund a Postdoctoral fellowship, PhD studentships and a programme for visiting international scholars, as well as a series of seminars and conferences. 

The interaction between Imperial College’s Mathematical Finance Group and CFM's Quantitative Research Division will help develop innovative solutions to problems that confound City traders, risk managers and regulators.

Professor Rama Cont, Director of CFM-Imperial Institute of Quantitative Finance, said: “As markets continue to rebound from the recent global financial crisis, we are glad to seize this opportunity to explore new directions in financial modelling. We see the CFM-Imperial Institute as a platform for interdisciplinary research and exchange of ideas, open to academics from all departments as well as our industry partners. I hope to see lots of interesting research coming out of these exchanges”.

Jean-Philippe Bouchaud, chairman of CFM, said: “We are delighted to be partnering with Imperial in founding this new institute. CFM has a long history of research excellence in the field of finance, and this collaboration formalises our involvement. We have a lot of common research interests with Imperial so we make an excellent fit for each other. Our partnership also recognises London’s position as a leading financial market and an active centre of academic research about markets.”