Investing in Solutions

Andrew W. Lo, faculty

According to Lo, financial engineering could be the key to solving many of the world’s biggest problems. In a bold proposal, the hedge fund guru has suggested using collateralized debt instruments to fund an explosion in cancer research. The concept of designing “megafunds” to spread the financial risk of biomedical innovation over a larger base―explored at MIT through a series of “CanceRX” conferences―also holds potential, Lo believes, for fields such as alternative energy, manufacturing, and climate change. Another of Lo’s projects—situated at the intersection of finance, cryptography, and AI—is a collaboration with faculty member Vinod Vaikuntanathan SM ’05, PhD ’09. Together they are creating a multi-party platform to collect data that will give markets and firms better cybersecurity risk information, while respecting privacy concerns.