How To Become A Risk Analyst (Skills And Qualifications)

By Indeed Editorial Team

Published 8 November 2021

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Running a business can present many risks and challenges. That is why companies often hire risk analysts to mitigate losses involved in operational costs, financial operations and other key areas. If you are a financial professional with a knack for helping companies make informed business decisions and protect company resources, you may want to know more about this career path. In this article, we discuss how to become a risk analyst, explore their typical duties, skills and average salary and learn about the different types of risk analysts.

How to become a risk analyst

A risk analyst is a financial specialist who examines the risks associated with investments, new clients, economic conditions or regulations to determine whether it is safe to make a financial decision. They forecast potential outcomes and make recommendations to limit risks. Here are the steps to learn how to become a risk analyst:

1. Complete 10+2

Students planning to pursue a career as a risk analyst can benefit from studying subjects like mathematics, economics and statistics in their 10+2. After your Class 10th board exam, consider selecting either the science or commerce stream. Try to secure at least 50% marks in your higher secondary (10+2) examination, as many colleges select candidates based on their marks in the higher secondary board exam.

2. Earn a bachelor's degree

Since most employers look for candidates with a bachelor's degree, consider pursuing a Bachelor of Business Administration (BBA) or Bachelor of Commerce (BCom) degree after completing your 10+2 board examination. You can also take an entrance examination offered by certain colleges. Some examples of entrance examinations include Delhi University Entrance Examination (DUET), Christ University Entrance Test (CUET) and Aligarh Muslim University Entrance Examination (AMUEE). You can choose to specialise in finance, banking and insurance, risk management or economics.

3. Complete your postgraduation

After completing your bachelor's degree, you can opt for a master's degree to continue your education. Some of the common postgraduate courses in risk management include Master of Business Administration (MBA) with specialisations in risk management, finance, business analytics, entrepreneurship or marketing. Similarly, you can pursue a Master of Commerce (MCom) degree programme with specialisations in accounting, taxation, banking and finance or mathematics. Alternatively, you can pursue a Master of Economics, Master of Statistics or Master of Finance and Control degree.

4. Apply for entry-level jobs

After your graduation, you can take an entry-level job to expand your practical knowledge. This also gives you the necessary industry exposure. You can start by shortlisting some of your preferred companies and applying for job profiles that suit your skills and qualifications. There are several opportunities within the risk management services of investment companies, insurance companies, banks and other financial institutions.

Responsibilities of a risk analyst

Here are some of the daily duties of a risk analyst:

  • reviewing financial and legal documents, industry developments and related resources

  • monitoring new and existing compliance requirements

  • finding ways to mitigate or prevent risks and recommending actionable plans

  • developing quality control measures

  • analysing statistical reports by using various valuation tools, statistical models, quantitative analysis and techniques

  • predicting future trends that can negatively affect the organisation

Skills of a risk analyst

Here are some skills to acquire to become a successful risk analyst:

Analytical skills

A risk analyst's main job is to help the companies they work for stay financially healthy. They do this by analysing a company's economic conditions and financial documents. They may research the market and industry in which their client operates to evaluate its competition. When working for accounting companies or investment firms, they may analyse client portfolios and calculate potential losses. A good way to build strong analytical skills is to engage in challenging tasks and projects.

Related: Analytical Skills: Definition, Tips And Examples

Problem-solving skills

Risk analysts may work for a bank or an insurance company to analyse prospective clients' applications. They often use their problem-solving skill to determine the feasibility of different investments or loans. Carefully reviewing each potential solution to a problem can help you develop your problem-solving skills.

Industry and market knowledge

Risk analysts can work in various industries, such as finance, retail, insurance or energy. Having in-depth knowledge of their industry of operation is essential for them. Understanding the marketplace and organisational activities helps them identify risks and priorities for the company. Such specialisations may include market risks, operational and technological risks, corporate risk management and regulatory risks. Overall, it is important that you are aware of broader risk issues and regulations for specific industries and businesses.

Communication and presentation skills

Strong communication and presentation skills are important for risk analysts. One of their roles is to communicate complex financial products and risk management practices to senior management and non-technical audiences. They may also present their findings and summarise various risks at board meetings. It is important for risk analysts to be able to clearly state what risks a company is facing and recommend a path for a management group to follow. Having good communication skills can also help them effectively interact with regulators, third-party agencies and customers.

Negotiation skills

Risk analysts often work closely with auditors and other departments. They use their negotiation skills to convince their co-workers and business partners to be aware of any possible risks and threats to the company. A risk analyst may also negotiate the terms of payment and other legal agreements.

Related: What Is Persuasion? Definition, Examples And How It Works

Familiarity with technology

Employers often look for risk analysts with a working knowledge of computers and the ability to figure out how to use a new technology or tool. This knowledge allows a risk analyst to use statistical and other analytical tools properly. Risk analysis often involves using different types of software and programs, so try to learn about the most common ones while completing your education or training.

Types of risk analysts

Here are the four types of risk analysts:

Credit risk analyst

A credit risk analyst analyses risks associated with customers who do not pay for products or fail to reimburse their loans. Credit risk analysts usually work for commercial and investment bankers and rate agencies or credit card lenders. They may also find employment with mortgage firms, insurance carriers or other financial service providers.

Related: What Is A Research Analyst? (Duties And Qualifications)

Market risk analyst

Market risk analysts examine how external factors, such as interest rates and commodity prices can influence the financial performance of a firm. They also study the stock market's potential impact on their company's share prices. They often work for various financial institutions, investment companies or consultancy firms.

Related: How To Become Finance Analyst: A Step-by-Step Guide

Regulatory risk analyst

A regulatory risk analyst assesses the effect that new regulations or changes in legislation may have on the stock market and their organisation's business or sector. Almost every industry, especially firms involved in accounting, government services, technology, finance and operations hires them. Some of their duties generally include developing risk management systems, conducting statistical analysis and reporting research results.

Related: What Is A Supply Chain Manager? A Complete Guide

Operational risk analysts

These professionals help an organisation prepare for risky operational situations. For instance, they can help companies identify any signs of a product malfunction or employee fraud. They also help businesses prepare contingency plans to manage high risks and exposure.

Average salary of a risk analyst

The average salary of a risk analyst is ₹537,409 per year. Their exact pay can depend on their experience, qualifications, the industry in which they work and the location of their job. Organisations may also offer lucrative performance-based benefits packages, which can increase your overall income.

Risk analyst job description example

Here is an example of a risk analyst's job description:

We, at Ramanujam Enterprises Ltd., are looking for a lead risk analyst to join our risk management department that works with business units throughout the firm to identify and manage risks faced by the organisation. Our ideal candidate can provide regulatory guidance and conduct continuous risk assessments, with an emphasis on operational risk.

Your responsibilities may include the following:

  • recommend risk tolerance statements, risk appetites and risk benchmarks

  • proactively identify and communicate current and emerging risks with appropriate business leaders

  • influence and negotiate appropriate actions to mitigate or prevent failures related to identified risks

  • liaise with business partners on gathering data to support the quantification of various emerging risk scenarios

  • demonstrate active learning and intellectual curiosity to pursue appropriate risk management

Salary figures reflect data listed on the quoted websites at the time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.

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