Careers in Risk Management

Updated on April 3, 2024
Article byWallstreetmojo Team
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

List of Top 3 Careers in Risk Management

Below are some of the Risk management careers/jobs that a person can opt for.

Careers in Risk Management

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A risk management career refers to identifying and assessing risk to make productive investments and alleviate the danger caused by external and internal instabilities. Risk is everywhere in the business and often costs very dearly if taken trivially. In the financial world, this risk management job plays a significantly unique role, as clearly manifested by various financial crises, it grips the economy at large, weakens it, and the shocks are felt in several markets with emerging economies witnessing some serious damages.

The Risk Management Career is one of the most heavily invested and highly regarded areas in the entire organization, simply because of the severity of the industry and its significance in profit building. A risk management job has traditionally played a very important role in syncing the grass-root policy with the firm’s growth objectives by being an anchor of progress and an agent of advancement, owing to analytical, research, and modeling efforts.

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Some important risk management careers/jobs in the industry are:

Career #1 – Operations Risk Analyst

Operations risk refers to the possibility of damage resulting from insufficient or erroneous procedures, policies, or processes. It can arise due to system failure, Human error, or any event that can potentially threaten the flow of business. Losses arising from internal/ external fraud, damage to physical assets, system failure, etc., can be termed operational risk. This is very difficult to determine and control compared to other types of risks.

Responsibilities

  • Sync the company’s operational policy with regulatory requirements.
  • Study well all the operational risks threatening the business, and at the same time, monitor and educate everyone about the consequences.
  • Work with different departments to understand and identify critical areas from a business perspective.
  • Maintain documentation of all the risk audits, reviews, and control measures are taken, thus suggesting improvements in the procedures.
  • Liaise with other risk teams to understand their stake in operational risk, thereby finding ways to soften the overall influence of operational risk.
  • Conduct operational risk assessments in business units regularly.
  • Keep updated about best practices in the industry.

Salary

  • The average salary for operations risk professionals in the United States is around $84,282 p.a.

Qualification and Skills Required

  • A Masters degree with focus on core subjects such as mathematics, statistics, business finance.
  • Additionally, Professional Certifications like FRM, and PRM are highly preferred.
  • High statistical aptitude with quick decision-making skills
  • A keen learner with the ability to lead a team.

Companies That Hire Operational Risk Analyst

  • Big four, i.e., PWC, Deloitte, KPMG, and EY.
  • All the Investment Banks, Research and sell-side firms.
  • Pension and insurance funds.

Positives

  • Secured, efficient, and effective business flow.
  • Increased regulatory obedience and compliance satisfied conduct.
  • Lower losses on account of preemptive actions.

Negatives

  • Operational risk is one of the most complex to monitor and manage. Companies have traditionally struggled to sync their operational risk into the central risk governing the structure, primarily because of the difficulty in understanding and assessing the full range of inextricable factors that contribute to operational risk.

Job Growth and Prospects

  • With the advent of machine learning and data analytics, companies are increasingly adapting to advanced risk mitigation methods and are finding ways to simplify and integrate operational processes. The demand for ops risk professionals is high and will only rise.

Career #2 – Market Risk Analyst

Market risk refers to the possibility of losses arising due to external factors beyond companies’ control, such as the risk of economic breakdown or interest rate changes. It is also called a systematic risk and cannot be mitigated through portfolio diversification/minimum variance. Primarily measured using various Value at risk [VAR] and stress testing methods, it helps companies understand the major risk threatening the markets and their standing.

Responsibilities

  • Carry out statistical modeling using VAR techniques to study the possibility of returns and losses from a particular investment, and explore new avenues for potential investment.
  • Research sagaciously the market trends, and help sync companies’ growth strategy with future estimated movements.
  • Prepare reports of such analysis and present it to the stakeholders.
  • Liaise with the trading desk and conduct a comprehensive assessment of strategies.
  • This career helps build a strong risk management infrastructure.

Qualification and skillset expected

  • Masters of engineering degree with a focus on mathematics, applied statistics, quantitative finance, or economics.
  • Advanced computing skills with knowledge of programming language.
  • Appeared or willing to appear for FRM Exam/CFA.
  • Strong reasoning ability with an above-average statistical aptitude.
  • A keen learner with a desire to lead a team of researchers.

Companies That Hire

  • The big four and all the Investment banks.
  • The research and sell/buy-side firms.
  • The pension and insurance funds.

Salary/Compensation

  • The average salary for Market risk professionals in the United States is around $102,274

Positives

  • Market risk is one of the biggest threats the industry is facing today. As shown by previous downturns and exposed weak links between the markets, companies today know weak risk structures can wreak havoc on their business, forcing them to shut down. Companies are increasingly becoming aware of the need to shield themselves from market uncertainties and ill effects.

Negatives

  • Market Risk results from an unpredictable turn of events, like a downfall in markets. It is like weather prediction; all the data and statistics may prove insufficient with one bad break. As seen in the housing debacle, a simple case of collateral risk may escalate to full-blown market risk.

Job Growth and Demand

  • Since the crisis, the demand for market risk professionals has been incredibly high due to the added regulatory framework and compliance requirements. According to some experts, the demand is expected to remain flat as it’s a mature industry compared to other disciplines.
  • As for prospects, the need for such professionals who possess high statistical insight and understand the number game will be on the rise.

Career #3 – Credit Risk Analyst

Credit risk is the possibility of loss resulting from the borrower’s default. Put, it’s the risk that the lender may not get back his owed principal and interest amount. At the outset, predicting who will default or fail to meet contractual obligations may not be able to predict. However, appropriately assessing and managing the possibilities can mitigate the potential damages. It is measured based on the borrower’s Overall capacity to pay back as per the terms of the contract.

Responsibilities

  • Analyze financial, and cash flow statements, thus carry out ratio analysis, liquidity, and rate of return.
  • Assess credit inquiries, new requests and conduct due diligence.
  • Prepare a report based on these assessments and share it with all the stakeholders.
  • Forecast market movements and help sync companies’ growth policies with future market trends.
  • Make sure companies’ policies are in full compliance with the regulatory requirement.
  • Stay updated with companies’ lending policies, also recommend improvements, if any.
  • Reconciling accounts and updating records in the internal systems.

Qualification and Skill Set Required

  • Bachelor’s degree focused on statistics, mathematics, or business finance. A Masters’s degree is preferred.
  • Strong quantitative aptitude and reasoning ability.
  • Concrete understanding of Ratios and ability to implement them in real-world situations.
  • Advanced computing skills, knowledge of coding are preferable.
  • A keen learner with the ability to write long descriptions and recommend the profitable company deals.

Companies that Hire

  • Big four
  • All the investment banks and research firms
  • Pension and insurance houses, etc.

Salary/Compensation

  • The average annual salary for a credit analyst is around $82,900

Job Statistics and Prospects

  • It is a very lucrative profession with excellent growth opportunities; as businesses progress and economies are booming, people feel a greater need to borrow.
  • According to the Bureau of labor statistics, as of May 2011, there were 59,140 credit risk professionals in the United States, and the trends show that the future for careers in this industry is on the rise and will continue to rise.

Positives

  • Owing to the broad nature of their academic groundwork and experience, credit analysts can work in several diverse financial careers, for example, real estate, commodity and brokerage finance, retail credit departments, Automobile credit and loan departments, etc., a major advantage of being a credit analyst.

Negatives

  • It’s a very stressful job. As a credit professional, your analysis will play a massive role in deciding the rate at which the applicant borrows and whether he gets a full loan or a credit line. The responsibility is huge, and the profile demands a lot of hard work; as such, it can’t be taken lightly.

Conclusion

With the advent of new technologies and innovations, businesses today are increasingly exposed to various internal and external threats. As such, they are investing more and more in the areas to prevent losses from such threats and are taking pre-emptive measures on a scale larger than before. As they struggle through the new age business landscape, they want to ensure their shock-absorbing power is second to none, therefore serving this critical area with higher interest.

Recommended Articles

This has been a guide to Careers in Risk Management. Here we provide the list of top 3 risk management job options, descriptions & career paths, including operational risk analyst, market risk analyst, credit risk analyst, etc. You may also have a look at these Career articles below –

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