Is an MBA in Risk Management Worth It?
March 10, 2021
Risk managers analyze a company's operations or financial strategies and control for unknowns, so the you-know-what never hits the fan.
Businesses can't predict every downturn, stock market crash, catastrophe, or data breach. Still, given the vast amounts of data companies collect, it's possible to identify many risks long before they can cause a problem. Identifying and then carefully managing risk is now a science. It allows businesses to put a plan of action in place to lessen the impact of a natural disaster, or a crime, or a good investment gone wrong.
Risk managers across industries use science and historical data to predict potential risks, then advise management on how to avoid them (or how to handle the aftermath when risks are unavoidable). If you have a business or business analytics background, solid analytical skills, financial acumen, excellent communication skills, and you love solving problems, the MBA in risk management may be for you. In this guide to a Master of Business Administration - Risk Management, we'll cover:
- What is risk management?
- Possible fields and career paths for a Master of Business Administration in risk management
- Prerequisites for a Master of Business Administration in risk management
- Top schools for a Master of Business Administration in risk management
- What you'll study when you pursue a risk management MBA
- Commitment required for a Master of Business Administration in risk management
- Exams and certifications to complete a Master of Business Administration in risk management
- Is an MBA in risk management worth it?
What is risk management?
Uncertainty is bad for businesses. Whether they're making decisions about growth or choosing investments, businesses need to be able to anticipate liabilities. The risks in 'risk management' can involve just about anything from credit risks to legal risks to natural disasters to hacking attacks.
Risk management lets decision-makers develop strategic business and financial plans that anticipate less-than-optimal outcomes. Risk managers are the professionals who use sophisticated tools and techniques to identify worst-case (and other adverse) outcomes and then create strategies for avoiding or lessening their impact. They then share these strategies with key decision makers.
Possible fields and career paths for a Master of Business Administration in risk management
Getting an MBA can open a lot of doors, whether your goal is to move into management or to switch careers. A Master of Business Administration in risk management in particular can prepare you to step into many roles, because risk managers are in demand. After earning an MBA, you could work as a:
Risk managers earn about $113,106 a year evaluating financial risk, safety risks, cybersecurity risks, and other risks. They may work at private corporations or for government agencies.
These are the risk managers who specialize in a specific field (like real estate or healthcare) or in a specific area of risk management (like cybersecurity risk).
Senior credit examiner
Credit examiners use financial data to determine whether individuals and businesses applying for loans are likely to default. Credit examiners earn about $84,620 a year.
These professionals audit banks to make sure they are stable. They look into a bank's financial status as well as whether it is operating ethically and within the law. Bank examiners earn about $106,000 a year.
In this role, your job will be to determine the likelihood of risk and the financial costs associated with risk. Many actuaries work in the insurance industry, but you might also work in the corporate world or for the government. Actuaries earn about $120,000 per year.
Prerequisites for a Master of Business Administration in risk management
Except in a few rare instances, MBA applicants need a bachelor's degree to be considered for admission. Popular undergraduate degrees for MBA in risk management candidates include a bachelor of science in:
- Risk management
- Actuarial science
- Business administration
- Computer science
- Data analytics
Unlike many master's-level students—who often enter programs directly following undergraduate study—MBAs typically accrue three to eight years of professional experience before pursuing their graduate degrees. As a result, your college major will likely matter less than your work experience. As part of your application, you'll submit your CV as proof that you have the required number of years of work experience required for entry into the program.
You will likely need to take the GMAT or GRE exam. Not all schools require them; some have waived them entirely. Others will waive them for candidates who have sufficient work experience or who already hold a master's degree.
In addition to your test scores, you will likely need to submit your college transcripts, a statement of purpose or essay, and letters of recommendation from two or more professors or colleagues.
Top schools for a Master of Business Administration in risk management
A lot of universities have Master of Science in Risk Management programs. Fewer schools offer risk management MBAs, but some good universities are among them. They include:
- Johns Hopkins University's Carey Business School offers a part-time Flexible MBA program in enterprise risk management
- Loyola University Chicago's Quinlan School of Business offers an MBA with a risk management concentration
- _Saint Johns University_ offers an Enterprise Risk Management MBA
- University of Colorado Denver/Anschutz Medical Campus's CU Business School offers a full-time MBA with a risk management and insurance specialization
- The Wharton School of the _University of Pennsylvania_ offers an Insurance & Risk Management major for MBAs
- The Wisconsin School of Business at the _University of Wisconsin - Madison_ offers an MBA with a risk management and insurance specialization
What you'll study when you pursue a risk management MBA
Read the curricula carefully at your prospective MBA programs, because schools take different approaches to risk management. One program may focus heavily on insurance and employee benefits, while another may emphasize data security and emergency management. Yet another may push investments and financial modeling to the center. You'll want to find a program that matches your interests and skills.
Your concentration coursework will depend on which program you choose, but your core business classes will probably include:
- Business ethics
- Operations and supply chain management
Most Master of Business Administration in risk management programs focus either on risk management as it pertains to finance or risk management as it relates to everything else (business processes, information security, human resources, etc.). Depending on the program you choose, you may take classes like:
- Actuarial Science
- Derivative Securities
- Emergency Management
- Employee Benefits & Retirement Planning
- Enterprise Risk Management
- Financial Modeling
- Incident Management
- Insurance Company Operations
- Interest Rate Risk Management
- IT Corporate Governance Management
- Principles of Risk Management
- Property and Casualty Insurance
- Security Risk Management
- Statistics for Risk Analysis
At the end of your studies, you will know how to analyze systems to identify and calculate risk, develop risk management policies, develop risk mitigation strategies, develop disaster recovery plans, enforce compliance, and assess the effectiveness of risk management efforts. In short, you will be a risk-managing machine, and people will feel very secure around you because they will not fear risk.
OK, maybe not, but you will be really good at managing risk.
Commitment required for a Master of Business Administration in risk management
Risk management MBA programs typically take one to three years to complete; full-time students should complete the degree in two years. This is the best option for students who can afford to take time off from work.
Part-time students in MBA programs, whether on campus or online, typically take three years to graduate. Part-time study is often the only option for students who need to keep working while they pursue the degree.
Accelerated or executive risk management MBA programs usually take about 12 to 18 months to complete. They are a great option for students with strong professional backgrounds.
Exams and certifications to complete a Master of Business Administration in risk management
You won't need to take any exams beyond those given by your professors or earn any specific certifications to earn a Master of Business Administration in risk management. Whether you decide to pursue certifications during your graduate school years (or after graduation) depends on how you plan to use your degree. Risk management certifications tend to be field-based, not general. For instance:
- The _Certified Risk Manager_ (CRM) designation is for risk managers working in finance, insurance, accounting, or legal fields
- The _Certification in Risk Management Assurance_ (CRMA) designation is for those working in an advisory capacity overseeing an organization's governance and enterprise risk management program
- The _PMI Risk Management Professional certification_ is for professionals with advanced risk management skills.
- _The Chartered Enterprise Risk Analyst_ (CERA) credential is for risk management analysts working in high-risk businesses.
- The _Financial Risk Manager_ (FRM) certification is for risk managers who work in banking
- The _Professional Risk Manager_ PRM designation is an option for generalists
All certifications bolster your résumé and make you a more compelling hire to at least some employers.
Is a Master of Business Administration in risk management worth it?
Earning a Master of Business Administration in risk management is a good idea if you're interested in learning how to recognize, identify, and mitigate business threats, but you're open to the idea of changing careers later. That's because, with this specialized MBA in hand, you can work in risk management or pivot to a number of other roles in the business world. It's also the right choice if you work in risk management, and you'd like to transition into a management or executive position.
On the other hand, if you love risk management and you don't see yourself wanting to change careers, a Master of Science in Risk Management might be the better choice. This focused professional degree will help you advance your career, whether you work in corporate finance, financial analysis, financial planning, banking, healthcare management, wealth management, or risk management. This is a good option if you're more interested in the mechanics of risk management than the business applications of risk management strategies. Bonus: Master of Science in Risk Management programs are typically less expensive than MBA programs.
Both degrees will give you the skills and knowledge you need to turn business threats into business opportunities when you can, and to mitigate risk when you can't.
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