What is a Risk Analyst? Key Types, Responsibilities, Skills, and Career Paths

Written by Kelly Bailey

Reviewed by Jeff Schmidt

Read Time 7 minutes

What is a Risk Analyst?

A risk analyst evaluates and manages a range of risks in the financial services industry. By identifying and addressing these risks, risk analysts play a critical role in risk management. Risk management is the function within an organization that helps identify and handle risks.

Using data, financial modeling, and qualitative assessments, risk analysts address threats like credit defaults and regulatory breaches. This work helps senior management teams make smarter business decisions and protect their organizations. As the global economy becomes increasingly interconnected, the importance of risk management grows.

So, what makes risk analysts indispensable in today’s complex financial and business landscape?

Why Do Companies Need Risk Analysts?

The global economy is more interconnected than ever, amplifying the impact of risks like market volatility and cyber threats. High-profile examples, such as the 2008 financial crisis, underscore the critical role of risk analysts in safeguarding against systemic failures. For financial institutions, risk management is necessary to thrive in today’s dynamic environment while maintaining stability.

Risk analysts proactively identify emerging threats, such as non-compliance with regulatory frameworks like Basel III, and develop strategies to mitigate them. By ensuring decisions are both informed and strategic, they help financial institutions adapt, thrive, and maintain resilience in an increasingly complex landscape.

Interested in pursuing a career as a risk analyst? Keep reading for breakdowns of key responsibilities, required education and skills, and career paths to help you make informed decisions about the roles that align with your interests and strengths.

Key Responsibilities of Risk Analysts

The daily responsibilities of a risk analyst vary depending on their area of specialization, but they generally include:

Identifying Risks: Using data, analytics, and industry trends, risk analysts pinpoint areas where potential threats may arise.
Developing Models: Building and interpreting models to assess the likelihood and impact of risks, such as credit defaults or market fluctuations.
Collaborating Across Teams: Risk analysts work closely with stakeholders such as traders, compliance officers, and executives to align risk management strategies with business goals.
Monitoring Compliance: Ensuring that the organization adheres to regulatory requirements and risk management frameworks.
Recommending Mitigation Strategies: Based on their analysis, risk analysts propose actions to minimize threats while maintaining operational and financial efficiency.

As risk analysts refine these skills, they become indispensable in shaping an organization’s risk management strategy. Next, let’s explore the skills and qualifications necessary to excel in this dynamic field.

Types of Risk Analysts

Risk analysts in banking and finance specialize in one type of risk. While the risks faced by financial institutions are varied, here are three of the most common risk areas, each with unique challenges and opportunities:

1. Credit Risk Analyst

Credit risk analysts assess the likelihood of borrowers defaulting on loans and evaluate creditworthiness. They analyze financial statements, calculate key metrics, and make recommendations to minimize credit exposure.

Typical Day: A credit risk analyst might start their day reviewing loan applications or credit proposals from both retail and corporate clients, calculating credit ratios, or assessing the creditworthiness of borrowers. In the afternoon, they might meet with relationship managers to discuss client credit quality, review the corporate loan portfolio for potential deteriorations, or analyze credit watchlists to recommend appropriate risk mitigation strategies.

Credit Risk - Lending — *Source: CFI’s Introduction to Risk Management course*

2. Market Risk Analyst

Market risk analysts focus on financial losses due to market fluctuations, such as changes in interest rates or stock prices. They work closely with traders and use tools like Value at Risk (VaR) to assess exposure.

Typical Day: A market risk analyst starts their day by investigating overnight trading limit breaches. They then monitor the day’s trading positions and collaborate with quants to refine internal models. Stress testing trading books for sudden market shocks may round out their day.

3. Operational Risk Analyst

Operational risk analysts identify and mitigate risks related to internal processes, system failures, and external events. Their work ensures business continuity in the face of unpredictable disruptions.

Typical Day: An operational risk analyst begins with scheduled meetings to assess system changes and risk mitigation plans. The rest of the day could involve incident reviews or collaborating with cross-functional teams to address risks from external suppliers or IT systems.

Other Types of Risk Analysts

While credit, market, and operational risk are among the most prominent areas, financial risk analysts can also specialize in other fields.

Liquidity risk analysts focus on ensuring organizations have enough cash flow to meet obligations without incurring significant losses.
Compliance risk analysts work to identify and mitigate risks associated with regulatory requirements, ensuring the organization avoids penalties and legal issues.
Enterprise risk analysts take a broader view, addressing risks across all facets of an organization, from cybersecurity threats to supply chain vulnerabilities.

These roles highlight the diverse opportunities within the field of risk management, catering to a variety of interests and expertise.

Risk Analyst Skills and Qualifications

Becoming a successful risk analyst requires a strong foundation in technical expertise and soft skills. Proficiency with tools like Excel is a given, and possessing SQL and Python skills is becoming more important for risk analysts.

Equally important are soft skills, such as the ability to communicate clearly and adapt quickly to regulatory changes. Together, these competencies empower risk analysts to safeguard an organization’s financial stability and thrive in this dynamic field.

Below is a breakdown of the essential qualifications and skills for this dynamic role.

Education and Certifications

Education lays the foundation for a career in risk analysis, equipping you with the theoretical and practical knowledge needed to navigate this complex field. Most employers expect candidates to hold relevant degrees. Professional certifications can further distinguish you in a competitive job market.

Degrees: Common fields of study include finance, economics, accounting, mathematics, or computer science. These disciplines build analytical and quantitative skills essential for risk management.
Certifications: Earning professional credentials such as Financial Risk Manager (FRM®) demonstrates advanced proficiency in financial and risk analysis.

For example, a finance graduate might strengthen their expertise by pursuing the FRM designation, which focuses on assessing and managing various financial risks. Certifications also signal to employers your commitment to professional development, giving you a competitive edge in the hiring process.

Technical Skills

Technical skills form the backbone of a risk analyst’s role, enabling precise identification, assessment, and mitigation of potential threats. Online learning providers like CFI offer a wide range of risk management courses providing hands-on training in skills you can apply immediately to your job. Beyond understanding risk, these skills involve frameworks to manage risk effectively and new tools like generative AI to assess risk.

Risk Identification: The ability to pinpoint potential risks using data analysis, financial models, and industry insights ensures that threats are detected early and accurately.

Regulatory Analysis: Understanding and interpreting complex regulatory frameworks like Basel III enables risk analysts to ensure compliance and align strategies with legal requirements.

Risk Measurement: Proficiency in assessing the potential impact of risks through quantitative tools and metrics, such as VaR, helps organizations prioritize and manage their exposures effectively.

Risk Mitigation: Crafting and implementing strategies and risk management plans to reduce or eliminate risks, such as diversifying portfolios or strengthening internal controls, ensures business stability and resilience.

For instance, a risk analyst tasked with monitoring trading activities might use VaR models to evaluate exposure limits and recommend diversification strategies to minimize financial losses. By combining these technical skills, analysts deliver insights that empower organizations to act decisively.

Company Characteristics and ESG Risk Management — *Source: CFI’s ESG Risk Management course*

Soft Skills

While technical expertise is essential, soft skills are equally critical for navigating the collaborative and fast-paced nature of risk management. These skills ensure that risk analysts can effectively communicate findings, adapt to change, and maintain attention to detail.

Attention to Detail: Identifying small discrepancies in data can prevent significant financial or reputational harm.
Communication: Simplifying complex risk assessments for diverse audiences, from traders to senior executives, is a key part of the role.
Adaptability: The dynamic nature of risk management requires analysts to quickly adjust to new regulations, technologies, or market conditions.

For example, during a sudden regulatory update, an adaptable risk analyst may lead cross-functional discussions to ensure compliance without disrupting business operations. Soft skills help analysts build trust and collaboration across teams while maintaining focus under pressure.

The combination of education, technical expertise, and soft skills creates a robust foundation for a successful career in risk analysis. By developing these competencies, you’ll excel in your role and position yourself as a valuable contributor to your organization’s long-term success.

Risk Analyst Career Paths

Risk analysts often begin in entry-level roles, such as risk associate, and can advance to senior roles with more responsibilities.

Early Career: Entry-level analysts focus on specific risk assessments, learning the tools and frameworks used in their area of specialization.
Mid-Career: As experience grows, analysts can move into positions like risk manager or VP of Risk Management, leading teams and overseeing risk strategies.
Advanced Roles: Top professionals may become Chief Risk Officers (CROs), where they shape an organization’s overall risk framework and report directly to the C-suite.

Career progression often depends on acquiring additional certifications, broadening technical expertise, and demonstrating leadership skills.

Start Your Journey to Becoming a Risk Analyst with CFI

If you’re ready to pursue a career as a risk analyst, building your expertise is the first step. CFI offers a comprehensive range of courses and certifications designed to equip you with the technical skills, industry knowledge, and practical tools required to excel. From risk identification and mitigation to regulatory analysis, you’ll find everything you need to get started.

Explore CFI’s risk management courses today and start your journey toward becoming a skilled risk analyst.