If you’ve seen the 80s teen flick, Risky Business, with Tom Cruise, you may be excused for thinking that careers in the financial risk arena are all about dancing around the living room in your underwear and trying to get a giant crystal egg back from a ‘lady of the night’.
Please don’t be confused by Mr Cruise’s zany dance moves, though! The professional life of a financial risk analyst is entirely different to this world of sports cars, pop-up brothels and bizarre university interviews!
Financial risk analysts are employed by companies to identify and scrutinise possible risks that will have an impact on the financial success of their business. These guys are then responsible for recommending measures to mitigate these risks. Risk analysts tend to specialise in one of four major risk categories:
1) Credit risk
2) Regulatory risk
3) Operational risk
4) Market risk.
If you enter this profession, you’ll be making recommendations on risk coverage, developing strategies to minimise risks and maximise rewards, and making sure that your company complies with financial regulations and other statutory requirements.
Furthermore, you’ll be tasked with researching current and future events and anticipating their possible effect on the economy, the financial services industry and the stability of financial institutions.
To carry out your duties, you’ll be using quantitative analysis, statistical models and valuation tools and techniques. Furthermore, you’ll be analysing research data by reviewing financial and accounting documents, industry developments and other resources.
You can find current vacancies on our Jobs page in the Banking, Finance and Accountancy sector.
Salary & benefits
Financial risk analysts in the early stages of their careers can earn salaries ranging from £22,000 to £45,000 per annum. As you gain more experience, your annual salary could rise to between £50,000 and £100,000.
Some senior financial risk analysts can even earn up to £250,000 a year. Most financial services companies also pay attractive bonuses, which are based on performance and achievement of targeted objectives.
The average working day for a financial risk analyst ranges between eight and 14 hours. You may also be required to work extra hours during critical situations or when deadlines are looming. Pressure levels are intense, especially in corporate finance and investment banking.
Travel outside the office is also a regular fixture, sometimes including overseas travel for financial risk analysts who work for international corporations.
To enter this profession, you’ll need a solid undergraduate degree (2:1 minimum) in any discipline, as well as strong grades at GCSE and A-level. Many employers prefer candidates with degrees in numerate and quantitative subjects, such as finance, business, economics, statistics, maths or accountancy.
In theory, you can enter this profession without a degree. However, this line of work is incredibly competitive and, therefore, candidates with degrees are preferred. You could even do a postgraduate degree in risk management to really boost your chances!
Knowledge of a second language and a background of relevant experience through vacation or industrial training placements are also recommended. In fact, many employers conduct internship programmes with the objective of identifying potential talented candidates.
Training & progression
The majority of your training will be done whilst on the job, but may also include formal training sessions across multiple functions and departments. Some employers may also sponsor you to take industry examinations to obtain professional qualifications, such as the International Diploma in Risk Management.
Career progression is driven by performance, experience and acquisition of professional qualifications. Employees with consistently high levels of performance may be eligible for promotion every two to three years.
When you reach the top of the career ladder, you will be working at senior manager or managing director level.