As a financial engineer, I create new products for banks and financial firms. Most of these products are for institutions or the banks/financial firms themselves and not for individuals unless you have a net worth in the 100's of millions. Also creating these products involves alot more than just saying lets do this, you have to be able to build probablity models, to show the risks and returns on them, as well as pricing models, to be able to price them. For example a weather derivative is similiar to an insurance on natural disasters. An insurance company would buy this product to offset the risk they have, if let's say a hurricane occurs and now farmers get there crops destroyed. The insurance company has to reimburse them for the loss, the bank/financial institution would then pay the insurance company a lump sum for this disaster. Meanwhile, the bank makes money from the insurance company from premiums on this product. Keep in mind premiums account for the probablity of a natural disaster, if you are hedging for a florida orange farmer, the premium is higher. So essentially what happens is that the risk of the disaster has been taken on by the bank, instead of the insurance company. This can also be applied for companies, instead of natural disasters it would be bankruptcies, etc...
Thats what I do full time in a nut shell.
