Careers In Risk Management List Of Top 3 Risk Management Jobs

List of Top 3 Careers in Risk Management

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

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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.

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

Career #1 – Operations Risk Analyst

Operations riskOperations RiskOperational risk is the business uncertainty a company comes across in the industry while executing its everyday business operations. Such risks arise due to internal system breakdown, technical issues, external factors, managerial problems, human errors or information gap. read more 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.

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 diversificationPortfolio DiversificationPortfolio diversification refers to the practice of investing in a different assets in order to maximize returns while minimizing risk. This way, the risk is kept to a minimal while the investor accumulates many assets. Investment diversification leads to a healthy portfolio.read more/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

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 FRMFRMThe FRM certification is globally recognized by institutions like the Global Association of Risk Professionals (GARP), USA. For certification, one must clear the FRM exams conducted twice a year.read more, and PRMPRMPRM (Professional Risk Manager) is a designation given to any person who has passed a series of examinations conducted by PRMIA (Professional Risk Managers’ International Association) and has the necessary qualifications to certify them that they have the requisite knowledge to measure the professional risk for a financial or non-financial body, quantify it and analyze it.read more 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 #3 – Credit Risk Analyst

Credit riskCredit RiskCredit risk is the probability of a loss owing to the borrower’s failure to repay the loan or meet debt obligations. It refers to the possibility that the lender may not receive the debt’s principal and an interest component, resulting in interrupted cash flow and increased cost of collection.read more 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.

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 deskThe Trading DeskA trading desk is a section within a bank or company that buys and sells securities such as bonds, shares, currencies, and commodities to facilitate their own or clients’ trades in the financial markets, ensuring market liquidity.read more 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/CFAFRM Exam/CFACFA (Chartered Financial Analyst) certification exam prepares you well for careers in Investment Banking, Portfolio Management, Financial Research, whereas FRM (Financial risk management) certification exam is suited for those who want to make a career in Risk management in Banks, Treasury Department or in Risk Assessments.read more.
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 fourBig FourBig Four refers to the top four accounting firms in the world that audit more than 80% of the US public companies. These firms are Deloitte, Pricewaterhouse Coopers, KPMG, and Ernst & Young. These firms have earned this title because of their huge size, good reputation and the worldwide reach in the field.read more 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
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.
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.

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.

Analyze financial, and cash flow statementsCash Flow StatementsA Statement of Cash Flow is an accounting document that tracks the incoming and outgoing cash and cash equivalents from a business.read more, thus carry out ratio analysisRatio AnalysisRatio analysis is the quantitative interpretation of the company’s financial performance. It provides valuable information about the organization’s profitability, solvency, operational efficiency and liquidity positions as represented by the financial statements.read more, liquidityLiquidityLiquidity is the ease of converting assets or securities into cash.read more, and rate of returnRate Of ReturnRate of Return (ROR) refers to the expected return on investment (gain or loss) & it is expressed as a percentage. You can calculate this by, ROR = {(Current Investment Value – Original Investment Value)/Original Investment Value} * 100read more.
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 accountsReconciling AccountsReconciling account is a process to make sure the account’s ending balance is correct. The general rule of accounting is to pass the journal entries first, then to prepare individual ledgers. The accounting ledgers reflect an ending balance tallied by the account’s reconciliation.read more 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.
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.
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.
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 lineCredit LineA line of credit is an agreement between a customer and a bank, allowing the customer a ceiling limit of borrowing. The borrower can access any amount within the credit limit and pays interest; this provides flexibility to run a business.read more. The responsibility is huge, and the profile demands a lot of hard work; as such, it can’t be taken lightly.

List of Top 3 Careers in Risk Management#

Career #1 – Operations Risk Analyst#

Career #2 – Market Risk Analyst#

Responsibilities#

Salary#

Qualification and Skills Required#

Companies That Hire Operational Risk Analyst#

Positives#

Negatives#

Job Growth and Prospects#

Career #3 – Credit Risk Analyst#

Qualification and skillset expected#

Companies That Hire#

Salary/Compensation#

Job Growth and Demand#

Conclusion#

Qualification and Skill Set Required#

Companies that Hire#

Job Statistics and Prospects#

Recommended Articles#