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How to Become a Risk Analyst?

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Becoming a successful risk analyst requires you to hold a good educational background undoubtedly but besides, in this job profile, you need a lot of personality traits, skills and interests.

So, in this article, you will learn all that is important to become a risk analyst and to make it into a successful career.

This article covers:

  • Who is a risk analyst?
  • Responsibilities/Job description of a risk analyst
  • Types of risk analysts
  • Educational background and essential traits to become a risk analyst
  • Salary of a risk analyst
  • How to land a job?

Who is a Risk Analyst?

Risk analyst is someone who identifies, assesses and monitors the amount of risk that the organization is exposed to. The role of risk analyst requires them to find out the impact of risk with the help of analysis of historical data.

Risk analysts specialise in accordance with the type of risk. The most common and known types of risk are credit risk, liquidity risk, market risk and operational risk.

Further, we will find out the responsibilities or the description of the job profile of a risk analyst.

Responsibilities/Job Description of a Risk Analyst

A risk analyst is responsible for risk management in the investments so as to help with the financial success of the organisation where they work. The risk analysts mainly identify and analyse the potential risks associated with the areas mentioned above and then develop risk mitigation strategies for the same.

Also, these strategies help with maximising gains while reducing risks.

Okay, let us take a look at the responsibilities of a risk analyst enlisted below:

  • To review financial and accounting-related papers or documents
  • To review industry-related developments and other resources
  • Research and study the events in the current scenario and anticipate any effect on the economy as well as the financial industry
  • Constantly keeping a check on the compliance requirements
  • Create contingency plans for emergency cases such as a market crash because of a pandemic situation, or government policy change, etc.
  • Hedging the risk

Next, we will find out the types of risk analysts.

Types of Risk Analysts

Risk analyst is mainly the job profile which is required in the areas such as trading, financial services and private banking. There are four major types of risk analysts:

  • Credit risk analyst
  • Market risk analyst
  • Operational risk analyst
  • Regulatory risk analyst

Credit risk analyst

A credit risk analyst analyses the risk which the organization faces because of its clients or customers defaulting on loans, credit and also the ones which do not pay for goods or services.

A career in the credit risk analyst role fetches you a salary which ranges between $29,624.75 to $37,919.68. Also, seniority of the role is extremely crucial while deciding the salary of the credit risk analyst.

This role is extremely important for the investment banks and investment companies. A credit risk analyst in the investment banking sector helps to find out which institution to trust while purchasing a product such as an exotic option. Hence, a credit risk analyst helps against such counterparty risks.

Market risk analyst

The market risk specialists do the analysis of the negative effect of the factors that pose risk to the organization’s share prices, such as an economic recession.

The salary for a market risk analyst ranges from $109,234 to $115,800. Market risk analysts are hired mainly by the hedge funds where they help the risk managers with market risk measures, models and best practices. Apart from hedge funds, they also get the opportunity to be hired in all financial institutions including but not limited to the energy industry involved in producing and selling energy. Hence, market risk analysts play a crucial role in making sure that the market risks are looked into properly so that preventive actions can be taken.

Operational risk analyst

An operational risk analyst helps to analyse the effect of risky operational situations or occurrences such as employee fraud, material waste, product malfunction and failure of the system etc. The salary of an operational risk analyst ranges from $5,001.86 to $23,184.31.

Considering that some operational risk is always borne by every company, it is essential that this risk is managed in the best possible way. For instance, a lack of contingency plans for situations like a pandemic, recession etc. will lead to loss while trading. An operational risk analyst helps you create a plan for such emergencies.

Regulatory risk analyst

This analyst finds out the effect of legislation that has already come as well as any forthcoming one which may have an effect on the organisation. The average salary of a regulatory risk analyst ranges from $44,000 to $89,000. A regulatory risk analyst is also hired by almost all the industries but specifically, those companies which are into technology, finance, accounting, government services and operations. Such companies’ operations are mostly affected by the change in legislation. For instance, tax changes as well as new regulations by government effects the way trading happens in the stock market.

Alright! This was all about types of risk analysts. Here it is also important to note that a risk analyst wears multiple hats and does perform different roles single-handedly as well. Hence, a firm can hire you as a risk analyst for performing each of these roles.

*All the salaries mentioned above are the average ranges in USD (U.S Dollar) from Glassdoor.com*

Going forward, now we will discuss the educational background and the essential traits or the characteristics needed to become a risk analyst.

Stay tuned for the next installement in whcih Chainika will discuss Educational Background and Essential Traits to Become a Risk Analyst

Visit QuantInsti for additional insight on this topic: https://blog.quantinsti.com/risk-analyst/

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