Risk Analysis
- Description
- Tasks
- Skills
- Useful Knowledge
- Entry Qualifications
- Professional Qualifications
- Trends
- Resources
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As with most financial services processes, investment trading involves elements of risk. Risk analysis, in the context of markets, is about identifying and analysing the outside factors that may affect major movement in individual share prices or the wider investment market. Having this information available enables investors to take a calculated decision about how much risk they are prepared to take and flag potential loss making situations.
Market analysts typically work closely with traders to calculate the risk associated with specific trading transactions.
Salary
Graduate training positions start at approximately £22,000 per annum. With the right experience, qualifications and skills you could progress to management roles and earn in excess of £70,000 per annum. This does not include potential bonuses and additional benefits. Salaries will vary considerably based on location and employer.
- Conducting research to assess the severity of risk
- Conducting statistical analysis to evaluate risk and using statistical software such as SPSS and SAS
- Using this information to recommend ways to reduce/spread or adjust risk profiles, which may involve an insurance strategy
- Presenting and outlining your findings and ideas through reports and presentations
- Working alongside traders to calculate risks associated with specific transactions
- Forecasting and monitoring market trends
- Analysing a bank's market position and running figures through complex modelling techniques to find value at risk (VAR) measurements
- Using risk findings to create contingency plans in readiness for market emergencies
- Liaising with other investment and wholesale banking teams, in particular traders and corporate financiers
- Producing weekly and monthly risk reports
- Staying informed about economic, compliance and market risk related issues
- Excellent interpersonal and communication skills
- Meticulous and analytical, with good attention to detail
- Highly numerate with excellent research ability
- Commercial and economic awareness
- Problem solving ability
- Influential, with strong reasoning and negotiation skills
- Ability to explain complex issues and present technical information clearly
- Independent and motivated, able to cope with pressure and responsibility
- IT literate
- Confidence to relate to a wide range of people
A new entrant will not always be required to have this knowledge. Employers usually provide training to acquire skills for:
- Risk management tools and techniques
- Different investors’ risk appetite to risk and monitoring of scenarios and events that are outside pre-defined tolerances
- Incidents where risk events affect each other or can occur simultaneously
- Organisational and regulatory requirements
- How risk and return features are used by customer relationship functions
The main route into risk analysis is through a formal graduate programme. Employers will require entrants to be numerate and typically ask for a 2.1 degree. Any degree discipline may be accepted, but some employers prefer a management, business, economics, financial or numeracy orientated subject. Each employer specifies exact academic requirements and preferred subject. There are degree courses in risk management related to finance available at City University and Glasgow Caledonian University.
Employers often encourage risk analysts to study in readiness for if their career should expand to managing investments, such as:
- CFA Society of the UK Investment Management Certificate (IMC)
- Chartered Institute for Securities & Investment (CISI) Level 3 Certificate in Investments
- CISI Level 4 Investment Advice Diploma
- Certified International Investment Analyst (CIIA) from the Association of Certified International Investment Analysts (ACIIA)
The Global Association of Risk Professionals (GARP) offers an examination which when combined with two years' experience, leads to internationally recognised certification as a Financial Risk Manager (FRM).
With several years’ experience, financial market analysts may progress towards more advanced professional qualifications, such as:
- Chartered Financial Analyst (CFA) qualification
- CISI Level 7 Masters in Wealth Management
- CISI Diploma
The Institute of Risk Management (IRM) offers an International Diploma in Risk Management, which is at postgraduate level and covers risk management in a wider context, including areas outside financial risk. The IRM also offers a qualification in Risk Management in Financial Services.
The main employers of market analysts include private and investment banks and investment management companies. UK-based jobs are mainly based in London, although some analyst positions may arise in Edinburgh and Glasgow. This is a global role, mainly confined to major financial centres.
