Credit risk analyst

A credit risk analyst

Description

Credit risk analysts manage individual credit risk and care for fraud prevention, business deal analysis, legal documents analysis and recommendations on the level of the risk.

The duties of a credit risk analyst include, but are not limited to:

  • Reviewing loan applications for potential risks, including an applicant’s ability to repay the loan
  • Reviewing financial statements to determine the company’s ability to repay its debts
  • Analyzing financial data to assess risk exposure and recommend solutions
  • Reviewing a borrower’s credit history to determine their risk of defaulting on a loan or other financial obligation
  • Communicating findings with other team members within the lending institution or other parties involved in the decision-making process
  • Monitoring loans to detect signs of financial distress or possible fraud
  • Preparing reports summarizing the findings of the analysis and recommending next steps
  • Reviewing business plans to determine whether applicants have realistic expectations about their ability to repay loans
  • Managing risk for banks, insurance companies, real estate firms, and other organizations that are exposed to financial loss from loan defaults or other factors

Other titles

The following job titles also refer to credit risk analyst:

credit risk surveyor
financial risk surveyor
credit risk consultant
financial risk technician
credit risk manager
senior credit risk specialist
graduate credit risk specialist
financial risk specialist
financial risk manager
credit risk analyst
credit risk controller
assistant credit risk specialist
trainee credit risk specialist
financial risk analyst
credit risk technician

Working conditions

Credit risk analysts work in the financial industry in banks, insurance companies, and other businesses. They typically work regular business hours, although they may have to work longer hours to meet deadlines or to handle unexpected problems.

Credit risk analysts usually work in office settings, but they may travel to meet with clients or to attend conferences. The work can be stressful, and credit risk analysts must be able to handle pressure and meet deadlines. They must also be able to work independently and make decisions that could have a significant financial impact on the company.

Minimum qualifications

Credit risk analysts are typically required to have a bachelor’s degree in finance, accounting or another related field. These programs provide aspiring credit risk analysts with the knowledge and skills they need to assess a company’s financial health.

Credit risk analysts typically receive on-the-job training to learn their role’s specific processes and procedures. Training may include shadowing current credit risk analysts or learning from other company employees. Training may last for a few weeks to a few months.

ISCO skill level

ISCO skill level is defined as a function of the complexity and range of tasks and duties to be performed in an occupation. It is measured on a scale from 1 to 4, with 1 the lowest level and 4 the highest, by considering:

  • the nature of the work performed in an occupation in relation to the characteristic tasks and duties
  • the level of formal education required for competent performance of the tasks and duties involved and
  • the amount of informal on-the-job training and/or previous experience in a related occupation required for competent performance of these tasks and duties.

Credit risk analyst is a Skill level 3 occupation.

Credit risk analyst career path

Similar occupations

These occupations, although different, require a lot of knowledge and skills similar to credit risk analyst.

call centre analyst
commodity trader
futures trader
actuarial assistant
foreign exchange trader

Long term prospects

These occupations require some skills and knowledge of credit risk analyst. They also require other skills and knowledge, but at a higher ISCO skill level, meaning these occupations are accessible from a position of credit risk analyst with a significant experience and/or extensive training.

financial risk analyst
economic development coordinator
business economics researcher
fiscal affairs policy officer
risk manager

Essential knowledge and skills

Essential knowledge

This knowledge should be acquired through learning to fulfill the role of credit risk analyst.

  • Risk transfer: The financial techniques aimed at avoiding damaging financially a business and instead, protect it in its operations. It is the operation of transferring liabilities and claims to third parties that have the financial muscle and specialise in bundling and managing risks in scale.
  • Financial forecasting: The tool used in performing fiscal financial management to identify revenue trends and estimated financial conditions.
  • Financial management: The field of finance that concerns the practical process analysis and tools for designating financial resources. It encompasses the structure of businesses, the investment sources, and the value increase of corporations due to managerial decision-making.
  • Risk management: The process of identifying, assessing, and prioritising of all types of risks and where they could come from, such as natural causes, legal changes, or uncertainty in any given context, and the methods on dealing with risks effectively.
  • International commercial transactions rules: Pre-defined commercial terms used in international commercial transactions which stipulate clear tasks, costs and risks associated with the delivery of goods and services.
  • Assessment of risks and threats: The security documentation and any security-related communications and information.
  • Economics: Economic principles and practices, financial and commodity markets, banking and the analysis of financial data.
  • Financial analysis: The process of assessing the financial possibilities, means, and status of an organisation or individual by analysing financial statements and reports in order to make well informed business or financial decisions.
  • Financial jurisdiction: Financial rules and procedures applicable to a certain location, whose regulatory bodies decide on its jurisdiction

Essential skills and competences

These skills are necessary for the role of credit risk analyst.

  • Apply credit risk policy: Implement company policies and procedures in the credit risk management process. Permanently keep company’s credit risk at a manageable level and take measures to avoid credit failure.
  • Produce statistical financial records: Review and analyse individual and company financial data in order to produce statistical reports or records.
  • Advise on risk management: Provide advice on risk management policies and prevention strategies and their implementation, being aware of different kinds of risks to a specific organisation.
  • Prevent fraudulent activities: Identify and prevent suspicious merchant activity or fraudulent behaviour.
  • Analyse market financial trends: Monitor and forecast the tendencies of a financial market to move in a particular direction over time.
  • Apply statistical analysis techniques: Use models (descriptive or inferential statistics) and techniques (data mining or machine learning) for statistical analysis and ICT tools to analyse data, uncover correlations and forecast trends.
  • Manage currency exchange risk mitigation techniques: Evaluate foreign currency and assess conversion risks; implement risk mitigation strategies and techniques to protect against fluctuation.
  • Negotiate sales contracts: Come to an agreement between commercial partners with a focus on terms and conditions, specifications, delivery time, price etc.
  • Manage financial risk: Predict and manage financial risks, and identify procedures to avoid or minimise their impact.
  • Write work-related reports: Compose work-related reports that support effective relationship management and a high standard of documentation and record keeping. Write and present results and conclusions in a clear and intelligible way so they are comprehensible to a non-expert audience.
  • Inspect data: Analyse, transform and model data in order to discover useful information and to support decision-making.
  • Analyse the credit history of potential customers: Analyse the payment capacity and credit history of potential customers or business partners.
  • Create risk reports: Gather all the information, analyse the variables and create reports where the detected risks of the company or projects are analysed and possible solutions are suggested as counter actions to the risks.
  • Carry out statistical forecasts: Undertake a systematic statistical examination of data representing past observed behaviour of the system to be forecast, including observations of useful predictors outside the system.
  • Deliver visual presentation of data: Create visual representations of data such as charts or diagrams for easier understanding.
  • Have computer literacy: Utilise computers, IT equipment and modern day technology in an efficient way.
  • Assess risk factors: Determine the influence of economical, political and cultural risk factors and additional issues.
  • Analyse financial risk: Identify and analyse risks that could impact an organisation or individual financially, such as credit and market risks, and propose solutions to cover against those risks.
  • Create risk maps: Use data visualisation tools in order to communicate the specific financial risks, their nature and impact for an organisation.
  • Apply credit stress testing methodologies: Use several approaches and credit stress test methodologies. Determine and analyse which reactions to different financial situations or sudden changes can have an impact on the whole economy.

Optional knowledge and skills

Optional knowledge

This knowledge is sometimes, but not always, required for the role of credit risk analyst. However, mastering this knowledge allows you to have more opportunities for career development.

  • Debt collection techniques: The techniques and principles used to collect overdue debt from customers.
  • Information confidentiality: The mechanisms and regulations which allow for selective access control and guarantee that only authorised parties (people, processes, systems and devices) have access to data, the way to comply with confidential information and the risks of non-compliance.
  • Teamwork principles: The cooperation between people characterised by a unified commitment to achieving a given goal, participating equally, maintaining open communication, facilitating effective usage of ideas etc.

Optional skills and competences

These skills and competences are sometimes, but not always, required for the role of credit risk analyst. However, mastering these skills and competences allows you to have more opportunities for career development.

  • Create solutions to problems: Solve problems which arise in planning, prioritising, organising, directing/facilitating action and evaluating performance. Use systematic processes of collecting, analysing, and synthesising information to evaluate current practice and generate new understandings about practice.
  • Perform data analysis: Collect data and statistics to test and evaluate in order to generate assertions and pattern predictions, with the aim of discovering useful information in a decision-making process.
  • Speak different languages: Master foreign languages to be able to communicate in one or more foreign languages.
  • Apply information security policies: Implement policies, methods and regulations for data and information security in order to respect confidentiality, integrity and availability principles.
  • Enforce customer’s debt repayment: Monitor customers to pay all debts and amounts due; negotiate return of merchandise.
  • Show diplomacy: Deal with people in a sensitive and tactful way.

ISCO group and title

3312 – Credit and loans officers


References
  1. Credit risk analyst – ESCO
  2. Credit Risk Analyst Job Description: Salary, Duties, & More – Climb the Ladder
  3. Featured image: Photo by Scott Graham on Unsplash
Last updated on January 29, 2023

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