Financial risk analyst: Job description

Financial risk analysts identify and analyse the areas of potential risk threatening the assets, earning capacity or success of organisations in the industrial, commercial or public sector. They are sometimes called risk managers. They have the responsibility of forecasting cost to the organisation and predicting change and future trends.

There are high degrees of specialisation within the profession. Risk analysts may work in sales, origination, trading, marketing, financial services or private banking, specialising in:

• credit;
• market;
• operational;
• regulatory.

Financial institutions are required to manage market and credit risks daily. Risk analysts are therefore increasingly tasked with responsibilities touching all four key areas.

An alternative but similar role to financial risk analyst is that of the credit analyst in which the creditworthiness of a business is calculated and a probability of payment determined. Risk analysis is considered by many to be advanced credit analysis.

Typical work activities

A financial risk analyst's role is to formalise the process of risk management within an organisation. This involves business decision-making and enabling the process of risk taking.

• Credit risk specialists analyse the risk to the company of its customers not paying for goods or services or defaulting on loans.
• Market risk specialists analyse the risk that outside factors may affect the share price or the market. They typically work closely with traders to calculate the risk associated with specific trading transactions.
• Operational risk analysts look at the likelihood of risky events, such as system breakdowns and employee fraud.
• Regulatory risk analysts look at the impact on the company of new legislation.

Work activities depend on the nature and business of the employer, but tasks typically involve:

• managing resources wisely;
• considering proposed business decisions;
• protecting the organisation's assets and public image;
• conducting research to assess the severity of risk;
• conducting statistical analysis to evaluate risk and using statistical software such as SPSS and SAS;
• making recommendations to reduce/control risk, which may involve an insurance strategy;
• reviewing legal documents;
• presenting ideas via reports and presentations, outlining findings and making recommendations for improvements;
• working with traders to calculate the risk associated with specific transactions;
• forecasting and monitoring market trends;
• purchasing insurance;
• analysing a bank's market position and running figures through complex modelling techniques to find value at risk (VAR) measurements;
• carrying out quantitative analysis;
• using financial packages and software, including portfolio management software;
• studying government legislation, which may affect a company, and advising on compliance;
• developing contingency plans to deal with emergencies.