What is a risk analyst?
A risk analyst will work with businesses to help them analyze certain financial risks — risks that can involve everything from investments to company costs. These analysts essentially analyze all potential risks involving running a business, mainly focusing on reducing all unnecessary expenses.
Potential risks include the possibility of robberies, the costs of location, the possibility of employee injuries and more. Risk analysts help companies recognize these risks and work to help prevent them — i.e. they may create certain safety procedures employees are then required to follow in order to reduce the risk of injury or they may identify a few ways in which the company could cut costs without hurting productivity.
Risk analysts may also take into consideration the current market economy and make predictions for the future of the company based on past and current economic trends.
Risk analysts, also referred to as risk managers, may work as an employee of one company or as a consultant for many companies. People in this field may work for financial institutions, banks, investment firms, accounting firms and more.
The day-to-day duties of a risk analyst mainly occur in an office, analyzing and examining related statistics and data. But these analysts may also go out into the field, visiting employees, other businesses, etc. in order to gather their own accurate data. They may also travel to collect recorded data they are unable to access from an office, such as government records, in order to determine a specific potential risk.
And risk analysts often specialize in their fields. Common specializations include credit, regulatory, operational, and market risk.
How do you become a risk analyst
While each entry-level position requirements may differ from organization to organization, most companies require candidates to have obtained an undergraduate degree. Any discipline may be acceptable, but certain math-related degrees are more applicable than others. Employers may prefer you have studied finance, economics, accounting or any other math-heavy subject. (Not to say you can't become a risk analyst with a science or arts degree!)
Candidates with post-graduate Master’s degrees may increase their chances of obtaining a desired position, as this is considered to be a highly competitive field. A Master's specialization would be even more beneficial if one's undergraduate degree didn't involve as much math or computer science as a company is interested in.
Companies may also look for relevant work experience. An internship or previous employment with a company or firm involving risk management may be beneficial.
How much should you expect to make?
The average risk analyst makes $62,488 per year; on the low-end of the salary range, risk analysts earn approximately $44,000, while on the high-end, they can expect to earn around $92,000, according to Payscale.
The salary of a risk analyst depends on several factors, including, one’s company, experience, location, and more.
Risk analysts tend to follow a path of entry-level risk analyst to risk manager to senior-level risk manager to director of risk management — the lower levels of this career spectrum making less than the higher ones.
And location plays a significant role as well. An entry-level risk analyst in Irvine, California may make around $70,000 per year, while a risk analyst who has been in the business for a while and lives in New York may be making upwards of $133,000 per year.
What skills do you need?
Risk analysis tends to be one of those career paths where a large percentage of knowledge is learned on the job. Companies may provide formal training, or they may help you learn along the way. But most will expect a certain level of knowledge and skill upon entering the field.
Risk analysts should be highly skilled in math subjects, including, statistics, economics, finance, and accounting. Studying a second language can also increase your chances of being hired into a company, as businesses work with companies around the world and are affected by international markets.
Risk analysts will use quantitative analysis and statistical models in order to calculate potential issues for a company. They use a great level of technology including valuation tools which are easier to understand with prior experience. Having a good level of understanding of computer science is also beneficial.
And risk analysts should be skilled in analyzing large amounts of data. As well as using critical thinking and problem solving in order to first recognize potential issues and second, work to solve them.
Risk analysts should be thoroughly organized. They will be working with a lot of numbers and data and need to organize them in ways that are accessible, legible and easily understood by those who are not risk analysts, as they will be explaining the potential issues found to their firms or companies.
Where to look for jobs
Jobs for risk analysts can be found on regular career-searching site, such as Fairygodboss, Indeed, Glassdoor, LinkedIn and more. There are also sites specific to finance-related careers, like eFinancialCareers.
Most risk analyst jobs can be found in banking, finance or accounting sections of career search sites.
And the job outlook for risk analysts is looking positive. Until 2024, positions for risk analysts are expected to rise by 7 percent, according to the Bureau of Labor Statistics. As the economy fluctuates, companies are investing more in risk analysts to help them make smart business and financial decisions.
However, companies are also discovering they do not need a full-time risk analyst on-staff. So full-time positions for risk analysts are not expected to grow, but temporary or part-time positions are. Which is a positive statistic for those risk analysts focused on consulting.
For those interested in pursuing a career in risk analysis, career experts recommend deciding which area you wish to specialize in and building experience early on. Apply for internships that will give you experience in finance, in economics or at investment firms. Take courses that will teach you coding and other highly applicable computer science skills. Talk to other risk analysts and see what kind of advice they have for the field. Decide whether you would rather work at an investment firm or as a consultant for many companies. And build your undergraduate (or graduate) curriculum around your ultimate goals.