Credit risk analyst: Key skills, responsibilities and career path
Credit risk analysis is crucial to businesses so they can weigh up all the factors that go into making a final decision on important credit matters. Quantifying risk is a skilled role and therefore in demand for many financial institutions.
What does a credit risk analyst do?
The role of credit risk analyst is to scrutinise the data and financial statements of either individuals or firms to work out how much risk would be involved in lending them money. They prepare reports and conduct financial risk assessments for use in the decision making process.
Credit analysts are often responsible for making underwriting judgements for loan requests from larger, commercial, or corporate clients. These decisions can’t be made by AI as they tend to be more complex and unique than a simple mortgage application from a retail client.
Essential skills for credit risk analysts
To be an effective credit risk analyst, you must possess a good balance of soft and technical skills. The latter can be gained through various credit risk analyst qualifications such as the the Chartered Financial Analyst (CFA), the Certified Public Accountant (CPA), and the Financial Risk Manager (FRM) and include:
- Strong analytical skills to analyse and interpret a wide range of data.
- Confident decision making after weighing up the pros and cons of a situation.
- High level of IT literacy to use tools and systems to produce accurate results.
Soft skills essential for credit risk analysts include:
- Clear communication
- Problem solving
- Coherent negotiation
- Commercial awareness
How to start your career as a credit risk analyst
Having the appropriate educational background and relevant certifications are just the first steps to entering the credit risk analyst profession. After obtaining a bachelor’s degree in a subject like finance, economics or accounting, entry-level roles can be a good place to start as you’ll work closely with those in risk management and other financial services.
Before making important credit decisions yourself, you’ll see how credit risk analysts work, which is a crucial environment to be in as you plan your career path. Developing skills to assess credit and market risk will help you become more knowledgeable and gain credit analyst responsibilities.
Challenges and opportunities in credit risk analysis
Working in investment banking can be exciting, but it comes with challenges, opportunities and responsibilities.
Challenges
Being a credit risk analyst means adapting to regulatory changes, managing large datasets and making decisions that will impact the business.
Opportunities
Financial modelling for credit analysts helps to ensure such viewpoints are sound, but this requires skill, knowledge and experience.
Responsibilities
As you further your career into a senior credit risk analyst, your proven track record will become known throughout the industry and help you secure the top jobs.
