Market Risk Analyst Role Overview:
Every FS firm (and countless non-FS firms’ finance departments) have some form of risk function. One of the main risks that businesses seek to hedge against is Market Risk. This kind of risk often refers to macro risk events like failed harvests and other natural disasters, manmade disasters (like conflict and political strife), inflation, interest rates and recessions, etc. These risks are systematic risks that cannot be avoided through diversification – though they can be de-risked through different strategies, and even turned into an advantage.
Most risk analysts will spend part, or all, of their career providing timely analytical advice around potential and actual market risk events. They may specialise into a specific area of unsystematic risk like investment or portfolio risk.
This is a fundamental role across FS and applicants from both sell-side and market infrastructure will often find a straightforward path to the buy-side, and vice versa.
As a rule of thumb, analysts’ range in experience from university graduates to c. 10 years’ experience – on the buy-side. In sell-side institutions and those larger asset managers with a more “corporate” hierarchy, analysts will normally be those professionals with 0-4 years’ experience, before stepping up through AVP/VP/Director equivalents. If a candidate moves from sell to buy-side – do not surprised to see the title remain flat or even “decrease” a level.
The following kinds or responsibilities and attributes can be expected to be found in market risk mandates.
Market Risk Analyst Key Responsibilities:
Interact with relevant stakeholders (Traders, Sales, Client Services, Portfolio Managers, etc.)
Reviewing & understanding pertinent regulatory frameworks
Improvement and continued monitoring of risk management systems and processes, risk monitoring, PnL, etc.
Strong product knowledge across relevant traded products on the desk or in the portfolio (FX, OTC, CDS, Rates, Commodities, etc.)
Strategic and timely analysis on an ad-hoc basis of a firm or portfolio’s market businesses and risk profiles
Market Risk Analyst Qualifications:
Market Risk Management at Analyst or Associate Level
0-10 years’ experience within a Market Risk function
Strong academic background – strong preference for STEM degree (min. BSc, MSc/PhD desirable)
Strong knowledge of relevant asset classes (FX, Securities, Equity, FICC, etc.).
Knowledge of financial products and key market risk concepts, such as risk sensitivities, VaR, scenario analysis and capital is required.
Market Risk Analyst Salary Ranges:
These vary wildly but there are some rough benchmarks that can be used across the board for London based roles:
Graduate Scheme Risk Analyst/Risk Analyst 0-2 years’ experience: £40-65k
3-5 years’: £60-80k
5-7 years’: £70-95k
7-10 years’: £95-120k
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