What's the Job Description of a Market Risk Analyst?
Market risk analysts examine a company's market risk and use their training and experience to advise best management practices. Read on to learn more about this career, including education requirements, certification and potential earnings.
As a market risk analyst, you perform many different analyses to calculate and model individual and combined risk factors for your company. The specific factors depend upon your company, but the standard concerns include fluctuations in interest rates, stock prices, currency exchange rates, and commodity prices. Using data about previous behavior, you apply a variety of specially formulated financial equations and computer programs to generate predictions about future changes. With these models, you can determine the severity of risk that your company faces on a specific subject.
You'll gather data from and relay information to the executive staff, the accounting department, the trading department, and other members of the market risk team. The information includes current commodity prices and any corporate trading transactions. You would then make sure that all this data is accurately entered into the correct databases, and you'd usually keep an updated list of prices. You'll also give regular reports on each of your analyses and findings. These will determine whether the company raises or lowers its prices and buys or sells stock.
If the company faces a severe market risk threat, you may work with the market risk team to devise and propose management strategies. You'll then analyze all the factors concerned, including available financing, assets at risk, and cost of implementation. After determining the most efficient and effective strategy, you'll work to implement it and test its efficacy.
All companies that buy or sell stocks employ market risk analysts, but not all market risk analysts work with the same issues. For example, energy companies worry more about the price of oil and electricity, whereas food-exporting companies monitor international exchange rates and price fluctuations. If you work for a bank, you'll watch interest rates and stock prices.
Important Facts About Market Risk Analysts
|On-the-Job Training||Not formally provided, but experience acquired through time on the job|
|Key Skills||Computer competency, critical and analytical thinking, excellent judgment and decision making, attention to detail, strong mathematical foundation|
|Work Environment||Primarily full-time in office settings; but, position may require some travel to visit clients|
|Similar Occupations||Budget analysts; financial managers; personal financial advisers; securities, commodities, and financial services sales agents|
To work as a market risk analyst, you'll need a bachelor's degree in economics, finance, or mathematics. Many employers prefer that you also have a graduate degree in financial engineering, economics, or mathematics. These programs will teach you the different financial equations and their applications. You'll gain a strong mathematical background in statistics and calculus. You'll also study how real-world finance departs from the mathematical models and how human behavior and psychology influence these deviations.
Although employers don't necessarily require certification, according to the U.S. Bureau of Labor Statistics, obtaining certification as a risk analyst can improve your employment opportunities (www.bls.gov). The American Academy of Financial Management offers a Chartered Certified Risk Analyst certification. To receive this certification, you must have both an accredited degree and at least three years of experience in an appropriate area. You must also take training at one of the agency's approved institutions and pass their certification exam.
Salary Info and Job Outlook
According to PayScale.com, most risk analysts earn between $48,000 and $95,000 a year, as of April 2021. The website additionally reported that market research analysts typically earn between $41,000 and $75,000, while risk management analysts earn salaries ranging from $49,000 to $100,000. The U.S. Bureau of Labor Statistics (BLS, www.bls.gov) indicated that the employment of financial analysts is projected to increase by about 5% between 2019 and 2029.