Master Degrees in Risk Management
While pursuing a masters in risk management, you’ll analyze the different types of risk facing commercial businesses and individuals, as well as the different tools, techniques, and processes to provide cost analysis and the benefits of various options.
What Is Risk Management?
Risk management involves understanding, analyzing, and addressing risk to make sure that organizations can achieve their objectives. After all, risk is everywhere and in order to continue growing and developing, companies and other organizations need to understand how to manage and overcome those risks.
Commonly, risk management is used by financial businesses and investment firms, such as through derivatives, and by insurance companies to calculate the risk of providing coverage.
Key Concepts of Risk Management
The curriculum while earning a risk management master’s degree focuses on analyzing the different types of risk, how they may impact different businesses or operations, and how to use the tools and technology to apply theories and research to real world situations.
In addition, because risk management is an important factor of finance and business profits, these programs also teach key concepts in business, how they may be impacted by risk, and how risk mitigation fits into the overall operations of a business.
As a result, key concepts of risk management include how the different types of risk can impact businesses and how to offer specific solutions to avoid them.
Types of Risks
There are many types of risks that businesses face, including:
- Financial Risks
- Operational Risks
- Perimeter Risks
- Strategic Risks
These risks can lead to different types of loss. Though many losses are unforeseen and unplanned, courses for a master’s in risk management teach the various methods that can make events more predictable and risk management techniques to lower the effect and loss of the different types of risk.
Did You Know?
Risk management emerged in the mid-1970s and evolved from the field of insurance management, which focused mainly on protecting companies from natural disasters, fire, theft, and others. Risk management focuses on these and other kinds of costly losses, such as product liability, environmental degradation, accounting compliance, and currency fluctuations.
Why Study Risk Management?
Risk surrounds us as we go through our day-to-day lives. The same is true for businesses, which face risks such as lower value, bad reputation, and new competition.
While pursuing a master’s in risk management, programs strive to teach core concepts, such as the ability to anticipate liabilities to develop strategic business and financial plans.
Other courses and assignments focus on the ability to diversify, hedge, and ensure against risks by using various tools and techniques, as well as how to communicate risk management recommendations to key stakeholders and decision-makers.
How to Earn a Masters in Risk Management
Earning a master’s degree in risk management combines aspects of a variety of fields.
For instance, usually the curriculum includes courses in accounting, finance, and economics. Analyzing and applying the key concepts of these fields are fundamental to understanding risk and how to offer solutions, as well as being able to offer profitability solutions to each of the types of risk.
Also, you’ll likely take management and leadership courses that examine research and theories in the modern workplace in order to prepare you for these types of positions upon earning your degree.
In addition, some courses will be technology focused, as while earning your degree, and afterwards as you pursue a career in the field, you’ll use a variety of tools and software to run analysis.
Common Admissions Requirements
Though every school has different admissions requirements, the most common when applying to a risk management master’s degree include:
- Completed application
- Official transcripts
- Letters of recommendation
- Statement of purpose
- GRE or GMAT scores
Keep in mind that every school has different admissions requirements, so be sure to check with a number of different schools to see where you should apply to.
For instance, some schools may not require standardized test scores, such as the GRE or GMAT, whereas others may require that you have an interview as part of the admissions process.
For example, some online accounting programs don’t require a GMAT, while there are also grad schools that don’t require letters of recommendation.
Available Concentrations in Risk Management
Some of the available concentrations for a risk management master’s degree include:
- Dynamic Financial Analysis
At some schools, Risk Management is actually a concentration for an Master of Business Administration (MBA) or a Master of Science (MS) in Accounting or Finance.
These programs may have a different focus. For instance, pursuing an MBA with risk management as a concentration may have more courses in leadership and management, with fewer courses focused on various elements in risk management.
On the other hand, choosing a risk management program with a concentration means the program usually focuses on understanding and applying key risk management concepts to specific areas of a business and to understand the potential career options of each.
These options are why it’s important to check the curriculum of a number of programs before applying.
Common Courses in Risk Management
While pursuing a risk management master’s, your curriculum examines the ability to assess and manage risks at different levels of various organizations. In addition, courses teach how to communicate those risks and strategies to decision makers so that they understand the risks and options available to different business situations and industries.
As a result, some of the common courses include:
- Financial Concepts
- Quantitative and Qualitative Decision-Making
- Business Continuity Management
- Enterprise Risk Planning and Compliance
- Measurement and Management of Market Risk
- Investment Analysis
- Econometrics Theory and Applications
- Risk Management and Capital Market
- Corporate Financial Risk Management
- Portfolio Analysis and Management
Remember that each program has a unique design and courses usually have different names from school to school. Therefore, your specific curriculum may vary from those listed above.
How to Earn a Masters Degree in Risk Management
Depending on the unique design of each program, the specific graduation requirements will vary. For instance, programs range from 30 to 48 credits, and usually take full-time students anywhere from 1 to 2 years to earn their degree.
Many programs offer evening or part-time programs to accommodate students who are unable to attend class on a full-time basis. These programs usually take longer to earn, but may provide more flexibility.
Other requirements usually include all required courses and electives, as well as a capstone or thesis project.
Usually, this is a written assignment that may include some type of oral presentation and requires you to apply the theories and concepts you’ve studied in all of your classes leading up to your final semester.
There may be other requirements as well, especially if you choose to earn a dual master’s degree or if you choose a concentration. In addition, every school may not require a capstone or thesis project, so be sure to understand all of the graduation requirements before applying.
What Is Risk Mitigation?
Risk mitigation is the practice of reducing identified risks. As risks are everywhere for individuals and businesses, it’s important that you understand these various risks, how they can hurt you or your business, and come up with a plan to reduce the impact of those risks.
Some of the types of risk mitigation include:
- Contingency Plans
- Measure and Reduce
There are many other ways to perform risk mitigation, such as developing sound infrastructure and consistent training programs for both new and current employees. Usually, the best approach to mitigating risk is to combine a variety of techniques so that risks are reduced before they become a problem.
What Is Risk Management in Insurance?
One of the key functions of insurance is reducing the exposure of individuals and businesses to risk, such as crime, accidents, vandalism, personal injury, and the death or illness of an employee.
Pursuing a risk management and insurance master’s degree differs from pursuing a risk management degree because of the added emphasis on insurance topics, such as:
- Commercial risks that are traditionally insured, including property, liability, and human resource exposure
- Economics of risk transfer
- Legal and regulatory environment that governs risk transfer domestically and internationally
- Strategic and operational management of insurance companies
These differences show how the various concentrations can affect the specific courses and curriculum of earning a risk management master’s, which may focus on a different aspect of the field.
Risk Management and Insurance Key Topics
With a slightly different focus than most risk management programs, pursuing a master’s with a focus on insurance means you’ll analyze:
- How to identify, measure, and manage risk
- How to mitigate and finance loss exposures using alternative risk management techniques
- Insurance products and corporate risk management strategies
- Decision making for the operation of insurance and related financial service sector firms
While similar, there are some differences between the core focuses of a risk management and insurance master’s degree and a risk management. Therefore, be sure to consider both options before applying to make sure that the programs you apply to meet your goals and expectations.
Types of Risk Management Master’s Degree Programs
When deciding to pursue a risk management master’s, you have options so that you can choose the program that fits your schedule and learning style best. These three options are:
- Online Risk Management Master’s: Classes and coursework are performed online, which means that you may have to contribute to message boards and hand assignments in on a specific day every week. This option may be best for students who are self-starters and who are looking for more flexibility.
- Hybrid Risk Management Master’s: In this format courses are offered both online and on-campus to provide with you the flexibility of online programs and the structure of on-campus ones.
- On-Campus Risk Management Master’s: All of your courses are on-campus at a set time and location, which may suit those who live close to campus and looking for more structure.
What Does a Master’s in Risk Management Prepare You For?
While a master’s in risk management may boost your career, there are other benefits to earning the degree. For example, some master’s programs prepare you to sit for the professional certification tests of the leading professional financial risk associations, which are:
- Financial Risk Manager (FRM) certification of the Global Association of Risk Professionals (GARP)
- Professional Risk Manager (PRM) certification of the Professional Risk Managers International Association (PRMIA)
Keep in mind that not all programs are designed with this specific goal in mind, though usually your courses and curriculum will focus on elements of these certification exams.
Careers in Risk Management
According to O*NET, a career resources site, 33% of risk management specialists have a master’s degree.i
What Is an Actuary?
An actuary analyzes the financial costs of risk and uncertainty by using mathematics, statistics, and financial theory to help businesses and clients develop policies to minimize the costs of those risks. They are essential to the insurance industry.ii
Career Statistics: Actuary
2017 Median annual salary: $101,560iii
Projected growth (2016-2026): 22%iv
- Compile statistical data and other information
- Estimate the probability and likely economic cost of a death, sickness, accident, or natural disaster
- Produce charts, tables, and reports that explain calculations and proposals
According to the United States Bureau of Labor Statistics (BLS), actuaries in the insurance industry typically specialize in a specific field of insurance, such as:
- Health Insurance
- Life Insurance
- Property and Casualty Insurance
- Pension and Retirement Benefits
- Enterprise Risk
Find the Perfect Risk Management Master’s Degree for You!
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[i] onetonline.org/link/summary/13-2099.02 [ii] bls.gov/ooh/math/actuaries.htm#tab-2 [iii] bls.gov/ooh/math/actuaries.htm#tab-5 [iv] bls.gov/ooh/math/actuaries.htm#tab-6
University of Toronto