Financial risk analyst
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:
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.
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.
Work activities depend on the nature and business of the employer, but tasks typically involve:
Although this area of work is open to all graduates and diplomates, a degree or HND in the following subjects may increase your chances:
Employers are increasingly looking for degrees in finance, mathematics or statistics. BSc courses in risk management related to finance are available at City University and Glasgow Caledonian University.
Entry without a degree or HND may be possible, but larger employers prefer graduates and so applicants without degrees may find their applications are looked upon less favourably than their graduate counterparts. Without a degree, experience in finance or insurance is usually required, along with professional qualifications.
A postgraduate qualification, such as an MSc in financial-related risk management or financial markets, can also significantly improve your employment prospects, particularly for candidates with an unrelated undergraduate degree.
Entry is also possible through graduate training programmes, especially in many of the larger finance organisations. Specific risk management training is sometimes included in these programmes.
Pre-entry commercial experience can be an asset.
Candidates will need to show evidence of the following:
Competition for jobs is usually intense. The role of financial risk analyst has grown significantly in recent years and involves the management of increasingly complex financial products. Enhanced regulations and a more risk-conscious banking sector, means organisations are investing more heavily in their risk functions, creating more jobs in this area.
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Training is on the job and depends on the employer. The following organisations offer relevant examinations leading to industry-recognised qualifications:
The GARP examination, combined with two years' experience, leads to certification as a financial risk manager (FRM). The programme, which is internationally recognised, reflects the changing role of the risk professional and is delivered in two stages. Level 1 covers core areas of risk management, such as quantitative analysis, financial markets and products and essential risk modelling. Level 2 covers specific topics on the practical implementation and execution of measurement and management of market, credit and operational risk, as well as a section covering current issues in financial markets.
The IRM also offers an International Diploma in Risk Management. This course is at postgraduate level and covers risk management in a wider context, including areas outside financial risk. The course is undertaken part time through distance learning and takes three to five years to complete.
Progression rates and routes vary according to the type of employer. In large organisations there may be greater opportunities, with scope for development internally, e.g. into management roles.
A typical career path in a large financial institution might be:
Risk is a growing area with very good career prospects. Risk consultancies offer employees the opportunity to move into the lucrative area of consultancy and many offer graduate programmes in risk management.
Opportunities also exist to move from risk into more general finance roles.
Corporate governance initiatives and a more restrictive and expensive insurance market have given risk analysts a higher profile within organisations. The importance of the role of risk professionals is increasingly being recognised, with risk managers gaining places at senior management level and as board members.
You may find that, in order to progress, you will need to move between organisations. Many professionals will change organisation within three to five years of joining. You may also need to gain additional professional qualifications for career progression with some employers.
Risk is a growing area of employment with good career prospects. Risk analysts can be found working in a wide range of organisations, predominantly in the private sector. Opportunities exist in the risk management departments of:
Self-employment/freelance work is also a viable option on a consultancy basis, although considerable experience and expertise are required to go down this route.
Some recruitment agencies specialise in finance and risk management posts, but vacancies advertised are usually targeted at those with experience. Examples include:
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