What to Expect in Your Career as a Risk Analyst

Financial institutions are required to manage market and credit risks daily. A risk analyst determines and examines the areas of potential risk threatening the assets, earning capacity, or success of the organizations in the industrial, commercial or public sector. Though typically hired by banks and insurance companies, more and more Risk Analysts are being employed by companies having large investments.

Within this profession, there are various kinds of risk analysts, a few are as follows:

• Credit Risk Analyst: Focuses on the risk associated with lending money.
• Market Risk Analyst: Focuses on the risk of uncertainty in the economy and market.
• Operational Risk Analyst: Focuses on the risk in an organization related to processes, systems, business operations, and people.
• Regulatory Risk Analyst: Monitors an organization’s operations and ensures that it is adhering to government regulations and other compliance requirements.

The skillset required and job responsibilities of a risk analyst may vary according to the area of focus. Though, their general responsibilities involve protecting the organizational resources, reducing risks, and helping the business safely navigate a challenging and volatile environment.

Skill Set Required

• Ability to break down complex and technical problem statements into easily readable and meaningful reports for decision makers
• Demonstrated capabilities in data interpretation and problem solving
• Good research and reporting skills
• Commercial awareness and expertise at probing and identifying solutions collaboratively with others using planning, organizational, problem-solving, and negotiation skills
• Strong numeracy, analytical, and strategy skills
• Ability to perform basic programming and computer literacy
• Strong knowledge of risk, credit management, regulatory and legislative policy and procedures in the financial sector
• Must have a professional, proactive, goal-orientated approach to work and perform under high pressure
• High statistical proficiency and comfort with numbers

Job Responsibilities

Research, collate and review internal and external data pertinent to their projects:

• Source, review, aggregate, and analyse data from multiple sources to provide a comprehensive assessment and help identify potential risks, concerns, and outcomes of decisions to be made
• Formulate systems and processes for collecting and storing data for future analytic projects
• Consult with Risk Modelers to create statistical outputs in support of a project and conduct research into potential clients and understand the risks of onboarding them
• Protect the organization’s assets and public image by helping develop contingency plans to deal with emergencies
• Collaborate with other team members, especially underwriters and insurers, to effectively analyse and present data
• Review legal documents and study government legislation, which may affect a company

Effectively report on the outputs of their research:

• Develop risk reports that state risk exposure, and suggest mitigation steps.
• Support business teams and leaders to interpret and respond to the identified risk exposure
• Create reports, summaries, presentations, process documents and outline findings to display results, and make recommendations for improvements

Maintain awareness of the risk landscape:

• Forecast and stay abreast of risk management economic and financial changes and trends
• Ensure that risk standards are up-to-date and uniform amongst all tools and reports
• Build an understanding of the potential consequences on the organization from the defined risk
• Monitor internal and external data points that may affect the risk level of a decision
• Examine a bank’s running figures and market position through intricate modelling techniques to find value at risk (VAR) measurements.
• Conduct statistical analysis using software such as SPSS and SAS/STAT to evaluate risks
• Work with traders to calculate the risk associated with specific transactions consider proposed business decisions

Educational Qualification

The entry-level positions typically require:

• A College diploma or
• An undergraduate university degree

The senior positions may require:

• Graduate degree
• Ph.D./doctoral candidates

Graduate Degrees can be in subjects:

Mathematics, Engineering, Finance, Actuarial Science, Risk Management, Mathematical Finance, Information Systems, Statistics, Business Administration, Mathematical Finance, Basic Sciences

Online Courses Available

1. Financial investment and risk management

2. Associate in Risk Management (ARM)

3. Chartered Financial Analyst (CFA)

4. Financial Risk Manager (FRM)

5. Professional Risk Manager (PRM)

Companies that hire Risk Analysts (Freshers)

1. Xceedance Consulting India

2. Allegis Services India Pvt Ltd

3. Invesco

4. Skyleaf Consultants

5. Udaan

This article was jointly written by Archi Agarwal and Aswathy B. Surendran from Elucidation Today.