What is a Financial Risk Analyst?
Financial Risk Analysts seek to maximise revenues and minimise operational losses by identifying and analysing potential risk factors that might endanger an organisation’s assets, earning potential, or success.
Financial Risk Analysts conduct financial modelling to evaluate and forecast the profitability and performance of goods and/or services, as well as construct business information dashboards to assist in decision-making and risk monitoring. They are also in charge of designing various financial models, delivering cost-benefit evaluations for business and strategic possibilities, market share, and profitability, and producing financial reports based on the effects of predictive modelling assumptions.
Additionally, according to their job description, they must design and verify various hypotheses as well as use the findings of analyses to prompt fresh inquiries that will help them comprehend the examined company issue(s) more thoroughly. If you are curious, imaginative, and value variety, a career in Financial Risk Analysis may be a perfect fit for you.
Although their specific responsibilities may vary, the major tasks, duties, and responsibilities of a Financial Risk Analyst will usually include:
- Examining the market position of the company using sophisticated modelling approaches to determine the value at risk (VAR) measures.
- Conducting quantitative analysis utilising financial tools and software, such as portfolio management software, to safeguard the firm’s assets and reputation.
- Offering assessments of the firm’s risk, including the creation of value at risk (VAR), duration of interest and spreads, and duration of equity.
- Helping create financial plans that meet the company’s desired financial returns and risk.
- Overseeing the process and collaborating closely with other Bank employees to ensure that reporting needs are provided promptly and accurately
- Being in charge of preserving the data needed for identifying, gathering, capturing, assessing, and measuring risks and income simulation measures.
- Providing support for research projects, error checking, model validation, and income simulation.
- Generating yearly simulations based on the company’s business plans
- Assisting in maintaining a professional risk control environment that is conducted within risk limits, processes, and standards set for regulatory and operational risks of the Bank and as reviewed by the Auditors/Examiners.
- Participating in the portfolio profitability measuring process and being in charge of mistake checking and the development of automatic and/or programmed testing methods.
- Testing potential software upgrades, and consulting a provider for analytics
- Being in charge of creating and analysing Gap reports
- Creating monthly income simulations and reviews, including stress tests, back-tests, and reconciliation; also taking part in quarterly revisions to the simulation’s underlying assumptions.
- Contributing to the maintenance of a professional risk control environment.
- Actively participating in the model validation procedures.
- Being responsible for the documentation of processes and procedures
- Keeping track of numerous problems that are being investigated and resolved, and updating management on a regular basis
- Communicating findings to management and business partners after coordinating the development of performance reports for management.
- Identifying concerns relating to government regulatory compliance, and making sure the relevant policies, strategies, and processes are put in place.
Salaries for Financial Risk Analysts vary depending on their position within the company, employer and location.
The national average salary for a Financial Risk Analyst in the UK amounts to £36,956, ranging from £24,000 to £57,000. Financial Risk Analysts, like many other financial professionals, could also get bonuses and other benefits in addition to their base pay. The average additional compensation in the UK is £3,966, ranging from £1,183 to £13,295. In comparison, a Financial Risk Analyst in London earns an average salary of £41,360, ranging from £28,000 to £61,000. The average additional compensation in London amounts to £3,966, ranging from £1,183 to £13,295.
Working hours and work location
The typical office hours for Financial Risk Analysts are 9 am to 5 pm. Furthermore, as a Financial Risk Analyst, you may need to put in a few more hours in addition to your 40 hours a week in order to fulfil deadlines. Your clients may occasionally need to meet outside of regular business hours to explore investment prospects.
Some of the work settings for Financial Risk Analysts include:
- Investment companies
- Insurance companies
- Credit unions
- Consulting firms
- Financial institutions
- Other medium to large-sized commercial and industrial organisations.
What to expect
Performing financial analysis and modelling that maximises profits and asset growth and avoids operational losses and other risk exposures is part of the job description of a Financial Risk Analyst. It also entails using and adjusting financial models and modelling scenarios to enhance company performance and control strategic risk exposure, as well as providing analytical assistance for various business strategies to guarantee that the organisation’s goals are realised.
All lending enterprises, including credit cards, consumer loans, real estate, commercial services, and school lending, require the assistance of Financial Risk Analysts. Additionally, they provide the creation of management-facing performance reports. They are in charge of creating and enhancing credit policies and risk management plans that promote portfolio expansion while ensuring that portfolios function within acceptable risk tolerance.
To ensure that you are capable of carrying out the duties, responsibilities, and goals of the position, the employer will expect you to fulfil a number of prerequisites before hiring you for the post of Financial Risk Analyst at their company. If you’re looking for work as a Financial Risk analyst, the following are typical criteria that companies could look for from you:
- Education: Bachelor’s Degree in Accounting, Business, Finance, Economics, Statistics or Engineering. However, MBA or MS degree in Banking and Finance, Accounting and Finance or Economics is a plus
- Certification: CFA (Chartered Financial Analyst) or FRM (Financial Risk Manager) certification is desired but not necessarily a requirement
Some of the skills that you should possess or acquire to become a successful Financial Risk Analyst include:
must have skills:
- Strong financial expertise. This knowledge should include market risk, ALM, and valuation ideas with an emphasis on a fixed income and derivatives valuation, such as MBS, CMBS, swaps, and options.
- Understanding of and/or training in market risk (ALM or fixed income portfolio), fixed income analytics, planning, and income forecasting at a financial institution
- Expertise in statistical/risk modelling and forecasting, ideally in the field of financial services, as well as experience in financial modelling, forecasting, cost-benefit analysis, and cash-flow analysis.
- Possessing the ability to create, manage, and carry out comparative financial modelling utilising relevant industry information and current assumptions
- The capability of creating business intelligence dashboards.
- High numeracy with good mathematical abilities, including a working understanding of stochastic optimization techniques and familiarity with linear and mixed-integer programming
- Working knowledge of statistical methods such as linear and logistic regression, neural networks, decision trees, time-series and forecasting, K-means clustering, survival analysis, etc.
- Presentation skills- skill to present findings, conclusions and alternatives, as well as provide clear explanations for complex and technical data in a clear and concise manner to users, management, and other staff
- Research skills- ability to undertake research, analyse data, processes and trends
- Interpersonal skills in order to build effective relationships through rapport, trust, diplomacy and tact.
- Decision-Making skills- ability to exercise initiative and using good judgement to make sound decisions.
- Financial Modelling-Knowledge of the assumptions included into contemporary pricing theory for instruments as well as the ability to enter and output a variety of sophisticated reports. Financial Risk Analysts must comprehend them and check the inputs and reports for consistency and reasonability.
- Computer skills- Intermediate to advanced Excel knowledge, especially for financial modelling, and experience with analytical/data collection tools such as SAS, R, VBA, Python, SQL, MATLAB, and Database construction and management is a plus
- Strong verbal and written communication skills
- Stress management skills
- Strong planning and organisational skills, as well as problem-solving ability.
In order to become a Financial Risk Analyst, it will help to have prior work experience in the financial or insurance sectors.
Business experience is also beneficial when looking to land the best jobs available in this market. In order to gain experience, you may want to look into available internships. Job competition is frequently fierce. Organisations are spending more significantly in their risk operations, which is leading to an increase in jobs in this sector, thanks to stricter laws and a banking industry that is more risk-aware. Once you’ve accumulated a significant amount of experience and developed your expertise, self-employment and freelance work are options.
After receiving their college degrees, the majority of Financial Risk Analysts begin their careers by holding junior analytical roles.
Some professions, which focus primarily on evaluating consumer credit, may be suitable for those with associate’s degrees and related expertise. A university degree is typically required for positions that concentrate on evaluating corporate credit since they sometimes call for a deeper understanding of finance and accounting fundamentals.Junior credit risk analysts can advance into senior roles with accountability for increasingly challenging tasks with a few years of experience and a track record of strong performance.
Senior analysts in certain companies are in charge of a team that performs analysis for a specific market, region, or sector. Top analysts can advance into financial management roles where they supervise analytical divisions, decide on final credit decisions, and keep tabs on departmental performance.
The University of the West of Scotland’s one-year full-time program will give you the executive training you need to launch your career as a Financial Risk Analyst. Since the London Campus is located in the financial centre of London it provides you with a unique perspective on UK business and gives you a hand up on Londons’ lucrative Financial Risk Analyst job opportunities.
During this one-year, full-time program offered by the University of the West of Scotland, you will receive the executive training you need to launch your Financial Risk Analyst career. A distinct perspective on UK business is provided by the London Campus’ location in the city’s financial sector.
Students can choose from a variety of start dates for this full-time program offered by the University of the West of Scotland London over the course of two years and eight months. UWS London provides their students with industry experts, guest lecturers, and seasoned professionals in implementing their program.. The best thing about this course is that it is held on the London Campus, in the centre of the United Kingdom