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Yale Launches Master’s In Systemic Risk

A class at Yale School of Management

A class at Yale School of Management

For many, the Great Recession proved to be a wake-up call that the world’s economy is more connected than ever before. The lesson: When things go wrong for some, it’s very easy for them to go wrong for everyone. Yale’s School of Management recently announced a new program aiming to help young professionals avoid and mitigate potential future collapses. Beginning in the fall of 2017, about a dozen early- and mid-career central bankers and regulators — mainly from developed nations outside of the United States — will descend on the New England campus for the school’s newest one-year master’s degree focusing on systemic risk.

“Clearly, we are not offering it with a desire to maximize revenue,” Andrew Metrick, a finance and management professor who will lead the program, jokes on a phone call with Poets&Quants. “If the goal were to get as many students as we could through the door, we would have chosen something with broader interest.”

Indeed, the master of management studies degree in systemic risk is an uber-specialized one. But it’s also a very necessary offering, says Metrick, who is also the director of the Yale Program on Financial Stability. “I really think there is a huge need,” he continues. “If we are going to be training leaders for business and society, this is a place where, right now, people are undertrained.”

SYSTEMIC RISK ONCE VIEWED AS ‘TROPICAL DISEASE’

Metric says the program, an extension of Yale’s current two-week summer program focused on the topic, is one of a kind across the globe. A total of 36 credits will be required for completion of the degree, with students taking five courses each semester. Required classes include Macroprudential Policy, Financial Stability Regulation, and Monetary Economics, among a handful of others. Besides Metrick, confirmed faculty members so far include former U.S. Treasury Secretary Timothy Geithner and resident Great Recession guru Gary Gorton.

Yale Dean Edward “Ted” Snyder says the program is a natural progression of Yale SOM’s faculty expertise and mission to combine business and society. “When the yogurt hits the fan the next time around, there really ought to be an academic institution that is connected to all these senior central bankers,” Snyder tells Poets&Quants. “And that hasn’t been in place up till now. We want to put ourselves in that position and help.”

Metrick says before the recession, systemic risk was often viewed as a “tropical disease.”

“You know, like, it happens in developing countries and in places where they don’t have good sanitation. It’s a First World problem,” Metrick explains, sticking to metaphor. “And we learned that’s completely not true.”

GLOBAL STUDENTS COULD REACH 80%

Interested applicants may begin applying any time for the program, which will have a tuition price tag of $64,200. While the first cohort will be capped at about a dozen, Metrick says the maximum size in following years will be 36.

Admissions requirements include the typical GRE or GMAT score, video interview, statement of interest, and recommendation letters. But, Metrick says, most important will be the requirement of students to have a guaranteed job waiting for them upon entrance to the program. “We’re not looking to have an independent placement operation,” he says. “What we really want are people who have jobs to go back to.”

Metrick predicts the global makeup of the cohorts could reach 80%, because of the prominence of central banks and typical career trajectories of young professionals in other countries. “We’ve talked a lot with central bankers around the world and we expect it to be a very global program,” he says.

‘SOMETIMES IT’S LIKE GETTING HIT BY A TWO-BY-FOUR WITH A RUSTY NAIL’

Though the courses are not expected to draw large amounts of MBAs, Snyder expects at least a few to take the new courses. “Even though this is quite specialized, we tend to have three or four MBAs every year who are really interested in these topics,” he says. The dean believes this is a result of a shift he is seeing from the MBA focus on microeconomics to macroeconomics. “Ever since the Great Recession and increasingly with globalization and the nature of opportunities facing MBAs, the balance certainly has shifted, so macroeconomics has become more important in business schools,” Snyder explains. “And macrofinance has become more important.”

It could also mean a greater shift in faculty expertise, he says. He believes strengthening the faculty’s expertise in macrofinance is a “good bet” over the long term of the full-time MBA program. Preparing students for potential macro-risks just makes sense, Snyder says.

“Sometimes it’s like getting hit by a two-by-four with a rusty nail. You can be doing everything right in terms of strategy and pricing, but you can get whacked,” Snyder says. “There’s an increasing subset of MBAs who say, ‘I want to be better at figuring out where the risks are.’ And they want to learn this stuff.”

DON’T MISS: POETS&QUANTS’ SPECIALIZED MASTER’S DIRECTORY