When a small company seeks additional funds to grow the business, it appeals to financial institutions for loans. Before a financial institution approves a loan, it gathers information about the business and forwards it to the institution’s credit risk analyst. It's the analyst's job to scrutinize this information and identify the business’ strengths and weaknesses. This helps to determine how creditworthy the business is.
Each business operates differently and brings a unique application portfolio to the financial institution. A credit risk analyst analyzes portfolios and compares each business to the institution’s credit policies. She identifies potential risks with each business that might lead the business to default on a loan, then makes recommendations to management about whether to extend credit and how much.
Skills and Attributes
Credit risk analysts must possess a variety of skills to succeed in this role. Interpersonal and communication skills give him the ability to interact with clients and coworkers. He must have strong math skills to perform calculations that evaluate risk. He must work well independently and often under pressure to meet deadlines. Customers may pressure him to reach a favorable conclusion leading to approval of their loans. He needs to maintain his focus while working in this sometimes stressful environment.
Credit risk analysts hold a minimum of a bachelor’s degree in business, accounting or finance. California employs the most credit risk analysts, according to the Bureau of Labor Statistics. Texas, New York, Florida and Ohio follow with the most opportunities for these professionals. Certifications give analysts an advantage in the job market. The Academy of Banking and Finance provides credit risk analysts the opportunity to take three levels of study, each followed by an exam, to earn the Certified Credit Analyst designation. The Risk Management Association offers the Credit Risk Certification.
According to the Bureau of Labor Statistics, credit risk analysts earned an average annual salary of $72,500 in May 2013. They earn the highest salaries in New York, District of Columbia, Connecticut, Rhode Island and North Carolina, with salaries ranging from $80,020 to $111,250 a year. The greatest opportunities exist in the depository and nondepository credit intermediation industry, which matches small business borrowers with potential lenders. There were an estimated 66,490 credit risk analysts employed nationally in 2013.
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