How to Become a Risk Analyst

Risk analysts are financial professionals who assess the financial risk of various business decisions in order to help companies limit their losses. The role is highly analytical and involves working with data, researching previous losses and processes, reporting findings to stakeholders, and making recommendations.

In this article, you'll gain a deeper understanding of the role and responsibilities, along with what it takes to become a risk analyst. Afterward, if you're interested in developing your knowledge in this area, consider enrolling in the New York Institute of Finance's Risk Management Specialization, where you'll learn, among other things, how to build an operational risk assessment program.

What does a risk analyst do?

Risk analysts interpret data to assess a company's financial risk—based on its strategy, operations, investments, and even natural disasters—and help minimize its potential losses. Using data from past events, industry trends, economic conditions, and regulation changes, risk analysts can predict outcomes and consequences that feed into a company's forecasts and make recommendations to mitigate any risks they foresee.

As a risk analyst, you may find employment across an array of businesses, organizations, or financial institutions. Risk analysts can be in demand for companies going through a policy change or new course of action.

Read more: What is Risk Assessment in Business Intelligence?

Risk analyst duties and responsibilities

The duties and responsibilities of a risk analyst can vary based on your area of expertise. However, the primary duties of a risk analyst tend to include:

• Working to reduce the risk in business and financial decisions

• Analyzing markets, financial data, industry trends, and potential threats

• Identifying processes and strategies that contribute to risk

• Building forecasts and predictions based on analyzing data

• Reporting on findings and making recommendations 

• Presenting findings to the executive team and stakeholders 

• Preparing strategies to mitigate risk

• Utilizing data analytics tools and risk information management software (RIMS) 

Essential risk analyst skills

Working as a risk analyst requires a range of both technical and workplace skills, as you need to analyze complex data and communicate with your team, delivering reports and recommendations. Examples of essential risk analyst skills include:

Learn how to create quantitative models to reflect complex realities, and how to include in your model elements of risk and uncertainty in the Wharton School's Modeling Risk and Realities.

Types of risk analyst

There are four main categories of risk analysts exist, all with a slightly different focus on the types of risk they assess:

• Credit risk analysts: If you are a credit risk analyst, you are likely employed by a bank, insurance company, credit card lender, mortgage company, or rating agency. It’s your job to assess the risk of lending money to people who don’t pay their loans or for products and services.

• Operational risk analysts: As an operational risk analyst, you assess a company's operations and processes to understand risk, produce strategies to mitigate risk, and improve procedures that may cause financial loss. For example, you would be responsible for preparing for operational risks such as a faulty product or a fraudulent employee.

• Marketing risk analysts: In your role as a marketing risk analyst, you would have specialized industry knowledge that you use to review and advise on investments and company share positions within the stock market. Marketing risk analysts often work within the investment or finance industries, as they deal with risk involving the stock market and company investments.

• Regulatory risk analysts: As a regulatory risk analyst, it’s your responsibility to look at changes in regulations and new legislation affecting the stock market and company investment.

Risk analyst: salary and job outlook

The US Bureau of Labor Statistics (BLS) reports the median salary for a financial risk specialist as $118,950 [1]. BLS projects financial analyst jobs to grow by 8 percent between 2022 and 2032, amounting to approximately 376,100 job opportunities per year [2].

Risk analyst career paths

There are different career paths and types of advancement you can explore if you're interested in a risk analyst career. Below, you’ll find possible job titles to consider with their average annual base salaries:

• Financial analyst: $79,486

• Credit risk analyst: $87,025

• Portfolio manager: $94,440

• Lead risk analyst: $96,087 

• Market risk analyst: $97,618

• Operational risk analyst: $98,931

• Regulatory risk analyst: $102,931

• Senior financial analyst: $103,614

• Senior risk analyst: $115,018

• Fund manager: $131,025

*All annual base salary data is sourced from Glassdoor as of October 2024 and does not include additional pay, such as commission and benefits.

How to become a risk analyst 

Becoming a risk analyst requires a bachelor's degree, knowledge of finance and business, and experience. Below, we've outlined the common steps to becoming a risk analyst, though the path can differ depending on the types of jobs you're interested in.

1. Earn a bachelor's degree

A bachelor's degree is a common requirement in this line of work with 71 percent of risk analysts holding a bachelor’s degree, according to Zippia [3]. The college major you choose can also be important. Relevant majors such as business, accounting, finance, information technology, or statistics can help you prepare to become a risk analyst.

2. Gain experience

If possible, an internship can be a great starting point, helping you gain important experience and network with other professionals in the field. Entry-level roles in risk analysis are often titled "junior risk analyst" and with somewhere between two and four years of experience, you can advance to an associate analyst or risk analyst role.

3. Earn a certification

There are a few industry-standard certifications available to financial assessment professionals, including Chartered Financial Analyst (CFA), Certified Financial Risk Manager (CFRM), or Certified Risk Manager (CRM). Earning one of these certifications can be a way to demonstrate your standardized knowledge and skill set. Each certification exam has different requirements and you should take time to determine which one is best for your career goals. To apply for CFA, for example, you need a minimum of four years of experience in a relevant field and have to pass a three-part exam.

While it may not be a requirement of a job postings, you may find that some employers prefer certification. If they don't, it can help you stand out from other candidates and even advance in your risk analyst career.

Read more: What Is a Financial Analyst? (+ How to Become One)

4. Consider a master’s degree

To advance in the field of risk analysis, you may want to consider earning a master's degree. It's not a requirement, but it can be a way to differentiate yourself from other job candidates and advance in your career. According to Zippia, 16 percent of risk analysts earn a master’s degree to boost their resume and knowledge [3].

Risk analysts with a master's degree earn nearly $10,000 annually more on average than those with a bachelor's [3]. And a master's degree can be especially important if you want to advance to senior positions like a fund manager or portfolio manager.

Learn about risk management on Coursera

Build the foundation you need to start a career as a risk analyst with the Risk Management Specialization from the New York Institute of Finance. Over four courses, you'll come to understand the principles of credit risk management and the steps to manage portfolio credit risks, as well as how to use statistical models to measure risk associated with different types of investments.