The credit risk analyst is a specialist employed by many different sorts of financial organizations. Examples include credit card companies, commercial banks, credit unions, and many others. The analyst’s job is to analyze new credit applicants to determine the amount of risk involved in lending money to them.
Credit analysts also monitor borrowers’ financial status to ensure that they remain able to fulfill their repayment obligations. In some roles, analysts can work directly with customers (both consumers and businesses) to evaluate credit and collect financial data. In other cases, analysts partner up with credit officers or retail sales agents who handle interactions with credit customers.
There are many analytical skills that credit risk analysts end up using in the course of their jobs. Data sources used by analysts include credit reports, financial statements, and histories of payment and employment. Evaluating business organizations for creditworthiness is more complex, and may involve studying an organization’s operations and the marketplace in which it works. When dealing with larger organizations, credit risk analysts have a responsibility to assess the competitive prospects of the organization in addition to its financial behavior.
Besides evaluating data and conducting analysis, credit risk analysts are also usually responsible for reporting on their findings in a comprehensible and useful manner. Some analysts are actually directly responsible for making lending decisions, but it’s more common for the actual decision-making to be done by loan committees or financial managers.
The point to start a career in credit risk analysis is with a junior analytical position following formal education (a bachelor’s or associate degree) in accounting, finance, or a similar field of study. Consumer credit evaluation positions generally require less experience and education than those that deal with business credit. In either case, experience is usually a viable alternative for advanced educational qualifications.
Following the accrual of positive performance records over the course of several years, a junior analyst earns the right to take responsibility for more complex assignments in more senior positions. The position of senior analyst, depending on the organization, may involve managing a team of subordinates. Analysts – and teams of analysts – often specialize in specific industries, markets, or regions. The very best analysts eventually get the opportunity to become financial managers. In this position, the individual usually takes responsibility for making final credit decisions and managing the work of a relatively large department. Harnham going into depth here about why you should choose a job in credit risk.
As noted above, a significant amount of applicable educational experience is desired by employers who are hiring credit risk analysts. The preferred specialties are quantitative business fields, e.g. accounting, finance, or economics. Bachelor’s degrees are generally required in all except entry-level positions. A candidate who possesses an applicable associate degree and relevant experience in the financial industry may be able to land a job as a credit risk analyst. A Bureau of Labor Statistics (BLS) survey from 2015 found that approximately one-quarter of credit risk analysts in the United States have no educational experience beyond an associate degree.
Higher-level analysis positions and roles with a managerial aspect generally require both substantial work experience and a bachelor’s degree in an applicable field. Most financial firms generally prefer managers who have received master’s degrees in subjects like finance or business administration.
Although there is no legal regulatory obligation for credit risk analysts to be certified, many employers attach significant value to the Credit Risk Certification (CRC) offered by the Risk Management Association. Achieving the CRC designation requires a minimum of three years of qualifying experience. The examination for the CRC designation covers seven different areas of credit risk knowledge.
The same BLS survey estimated that the credit analysis field was going to grow by roughly 10 percent by the year 2022. This represents performance in line with other industries and should equate to roughly 22,000 new jobs being created in that time.