Pros and Cons of Becoming a Risk Analyst
A risk analyst is a specific type of financial analyst. When someone is putting together a financial portfolio, these professionals are consulted to determine potential losses and come up with ways to limit them. Read on to learn some of the upsides and downsides to becoming a risk analyst.
| Pros of Becoming a Risk Analyst |
|---|
| Faster than average job growth (16% increase from 2012 to 2022)* |
| Promotional opportunities to managerial positions with experience* |
| Possibility for annual performance bonuses* |
| Good salary (risk analysts made an average of $92,250 as of 2014)* |
| Cons of Becoming a Risk Analyst |
|---|
| Keen competition is expected for new job candidates* |
| Deadlines can be stressful* |
| Long work hours (roughly one-third of analysts work 50-70 hours per week)* |
| Frequent travel to investors and clients is required* |
Source: *U.S. Bureau of Labor Statistics
Employment Information
Job Description
As a risk analyst, you assess economic trends, company performance reports and market data in order to make investment decisions. To limit a client's financial risk, you might recommend investments in different economic sectors or financial instruments. Some analysts specialize in particular geographic regions or markets. As a professional in this field, you may travel frequently to meet with investors; you may also spend a significant amount of time on the phone. Good communication is an important skill for risk analysts.
Salary Info
In May 2014, the U.S. Bureau of Labor Statistics (BLS) found that financial analysts earned an average yearly income of about $92,000. The second highest paying industry for financial analysts was other financial investment activities, while the top was securities and commodity exchanges. These industries paid annual mean averages of $115,420 and $124,400, respectively. Top paying states included New York, Alaska, California, Massachusetts and the District of Columbia.
Career Requirements
Education
A bachelor's degree in accounting, economics, business, statistics or finance is necessary in order to become a risk analyst. In many cases, a Master of Business Administration or a master's degree in finance is needed as well. When you're enrolled in school, you'll want to look for classes that cover risk management. Other topics to consider include corporate budgeting, accounting policies and financial analysis methods.
Licensing
The main licensing organization for financial analysts is the Financial Industry Regulatory Authority. Fortunately, many companies don't expect you to have licensure prior to being hired. In fact, your employer may sponsor your licensure. If you end up working for a different company, you'll typically need to renew your license to reflect your new employer.
What Are Employers Looking For?
With an increase in international investments, many employers are looking for risk analysts who are familiar with global trading and investing. If you can specialize in a specific region or country in the world, you'll possess a unique skill set that may interest some employers. Take a look at a few real job postings from March 2012:
- A company in Chicago requires a risk analyst to work in an accounting department. The analyst will develop performance indicators, gather risk data and recommend changes to minimize risk.
- An investment management employer in Pennsylvania is requesting a risk analyst familiar with Axioma, Bloomberg and FactSet. An undergraduate degree in finance, economics or a related area is preferred. The job requires 5-8 years of analytical work experience, quantitative and analytical skills, proficiency with spreadsheets and Microsoft Office, communication skills and investment knowledge.
- A Connecticut-based company is looking for a risk analyst with experience in foreign exchange markets. The ideal candidate should have a bachelor's degree in finance or economics and must demonstrate strong quantitative skills.
How to Stand Out
Obtaining optional professional certification can give you an edge over other risk analysts. For example, the CFA Institute offers the Chartered Financial Analyst (CFA) designation. You need at least four years of experience in the field and a bachelor's degree in order to qualify for the CFA certification exams, which include both multiple-choice and essay questions. Topics such as corporate finance, portfolio management, securities analysis, economics and accounting are covered.
Alternative Career Paths
Insurance Sales Agent
If you like protecting others from risky situations but aren't interested in the financial services industry, you could become an insurance sales agent. In this vocation, you work with businesses, families and individuals to come up with appropriate insurance policies. The insurance policies you sell on behalf of your employer cover different circumstances and scenarios.
According to the BLS, insurance sales agents made an average salary of $63,000 as of May 2011, so you're likely to make less in this profession than you would as a risk analyst. However, this career has fewer education requirements, and you may need only a high school diploma and state license to get started.
Personal Financial Advisor
If you like the financial aspects of being a risk analyst but want to work with more than just investments, you might consider becoming a personal financial advisor. In this role, you would come up with plans for the short- and long-term financial goals of your clients. You'll provide advice on decisions regarding taxes, investments and insurance.
In May 2011, the BLS found that personal financial advisors earned an average of around $91,000 per year, which is roughly the annual average for risk analysts. However, you may enjoy better job prospects as a financial advisor; the BLS predicted that employment would rise 32% between 2010 and 2020.
