GUEST BLOG: A career in credit risk

UoY Careers Rocket illy Guest blog written by Sean Bygrave, Credit Risk Market Support Manager, International personal Finance.

How about a career in credit risk in the finance industry?

I’m responsible for the credit strategy and performance of emerging markets and for creating and managing group-wide practices for developing credit resources. 

So what is the role of a credit risk analyst?

A credit risk analyst advises his or her employer about whether to give a loan. They do this by studying all the information available on current and past loans and using this to decide how likely a person is to default on a loan.

What sort of system is needed to support this role?

Creating a system for credit analysis can be rather complicated. In general, a credit risk analyst gathers all the information available on the loans given so far. They then use statistics to find out the probability of defaulting on the loan. Whenever someone applies for a loan, the analyst inputs the applicant’s information into the system to see the probability of default. The system is updated constantly with information from every loan that is given.

Why would the analyst recommend charging different prices to different groups of customers?

When an applicant has a lower probability of default, a credit risk analyst often advises the application of risk-based pricing. The idea is that the lender should charge lower interest to people with a lower credit risk. The less risk involved, the more a lender will loan and at a better interest rate.

What do we mean by consumer credit risk?

Credit analysis on private loans, often called consumer credit risk, is easier than on commercial loans. Private loans can include mortgages, credit cards, overdrafts and unsecured personal loans. The analyst gathers information about the applicant’s financial history, inputs it into the system that the business uses, then gives a recommendation.

What do we mean by commercial loans?

Commercial loans are considered more complicated than private loans as the credit risk analyst must decide whether the business is likely to be successful. When working with commercial loans, an analyst frequently must visit the business requesting a loan in order to gather information.

How do I start my career in credit risk?

To work in credit risk analysis you need a good honours degree in a numerate discipline, such as mathematics or statistics or a similar area. Most credit risk analysts will go through an extensive graduate training programme whenever they start their career with a new employer. You will need to be a good verbal and written communicator, with strong presentation and organisation skills. As well as analytical and numerical skills, you should work with creativity and good problem solving abilities.