Financial risk analyst

Salary and conditions

  • Range of typical starting salaries: £22,000 – £30,000 plus potential bonuses.
  • Range of typical salaries at senior analyst level with three to five years’ experience: £30,000 – £70,000 plus potential bonuses.
  • Financial analyst managers earn in the region of £70,000 plus potential bonuses, although depending on the employer this can exceed £100,000.
  • Salary levels depend on the size and type of the organisation. Most organisations also offer benefits packages.
  • Working hours typically include regular extra hours, although not weekends or shifts.
  • The work is mainly office based, but may involve visiting various other organisations.
  • Self-employment/freelance work is a viable option on a consultancy basis, although considerable experience and expertise are required.
  • Opportunities tend to be in large towns and cities.
  • The job involves working under pressure to meet deadlines.
  • Travel within a working day is frequently necessary and absence from home overnight is occasionally required.
  • There may be opportunities to work overseas, particularly if you are employed by a large international company.

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.

Entry requirements

Although this area of work is open to all graduates and diplomates, a degree or HND in the following subjects may increase your chances:

  • finance;
  • mathematics;
  • statistics;
  • accountancy;
  • legal studies;
  • business;
  • economics;
  • engineering.

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:

  • strong numeracy and analytical skills;
  • good research skills;
  • planning/organisational skills and problem-solving ability;
  • IT competence/computer literacy;
  • negotiation skills;
  • written and oral communication skills;
  • the ability to explain complex issues and present technical information clearly;
  • commercial awareness;
  • the ability to work independently and to cope with pressure and responsibility;
  • the confidence to relate to a wide range of people and to challenge people when necessary.

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.

For more information, see work experience and internships and search courses and research.