TO the layman, a credit risk analyst can be likened to a spoilsport or party pooper. As Shanon Shah, a credit risk analyst with a local oil company, explains: “A risk analyst is the voice of caution. For a giant firm, the bottom line is maximising profit. But to maximise profit, you have to think to what extent you are willing to risk, and what sort of risk you are willing to take.”
A company which is thinking of maximising profit will like to take risks and throw caution to the wind. “But risk analysts are the ones who say – ‘Hang on, how can we minimise the risk?’ - even if it means that the company will not make as much profit.”
If you ask someone who is a marketer or trader what he will do with a million bucks, Shanon adds, he will probably say that he will invest it on shares. “But people in risk management will find a bank with the most stable interest rate to invest their money.”
Companies now, says Shanon, are investing in risk management, particularly after the Enron scandal, which rocked the business world, when the corporation was exposed for tampering with the account books. Consequently, more and more companies feel that this department is essential to reassure prospective partners and clients on the credibility of the business proposition, so it is definitely a growing area in the corporate sector.
Shanon, who has been working for more than two years, admits that the job sounds very tedious, but the advantage, he adds, is that it's a nine-to-five job and he doesn't have to take his work home with him.
What does a credit risk analyst do?
I work in an oil company and as part of my job I have to assess and monitor the financial worthiness of potential as well as existing partners for my company. This means that if any company we have not done business with approaches us, I have to assess their credit worthiness, and check their financial health – perform assessments based on their financial statements.
I deal with companies that handle cargo and monitor the buying and selling of crude oil. As the cargo is worth a lot of money and companies pay by credit, it is important to ensure that their finances are sound. I also have to monitor on a regular basis if they keep to the credit terms we’ve set.
What qualifications do you need?
I have a Bachelor in Chemical Engineering and I thought that it would be a great disadvantage when I first started this job. But I have two colleagues who did finance and accounting and they say that they don’t find their qualifications relevant to this job either.
As I am working in an oil company, my degree is an asset. It gives me a good handle on the processes as well as an entry point when I talk to potential clients.
Some specialised knowledge is essential – for example, if you are in country risk, an interest in politics helps, but if you are in credit risk analysis, you need to have a flair for numbers as the work involves a lot of number crunching.
Anyway I think, more and more, people are going into areas that are not related to their degrees. Then the learning process happens on the job. At least, I did do an elective on accounting, economics and finance for engineers in university and this helps me when I read financial statements, or write financial reports. I would advise those doing technical degrees to do a social science or humanities elective.
Describe a typical day at work.
I have to monitor the volume of trade and the line of credit – when the payment is due and when it is made. We monitor on a weekly and monthly basis, then report to the decision makers and traders. If there is anything funny going on, like financial busts, then we issue alerts to the board. In a way, we have to look out for trends in world trade.
I also handle new registrations and check e-mail. Every day tasks just flow on like that, so on a new day, I continue unfinished work or start anew. I also follow up with the clients and relevant departments in the company.
What kind of personality is suitable for this job?
You have to be analytical and enjoy number crunching. Those who like to run around, meet people, and have a lot of interaction might not enjoy this job.
Most of the time, I have to sit at my desk and do Internet research of a company that might be a potential client – to see how financially sound it is. A lot of it is sitting down and reading.
And you also have to be patient, as sometimes the information flow does not trickle in as smoothly or as fast as you want it to.
What is the best part of your job?
To evaluate a company, I have to know what the industry outlook is, the stability of the country and how competitive it is. So, I get to learn a lot of stuff.
I process information and update people on the progress, so my work is less stressful. I don’t have to wait for phone calls like traders who deal with people in different time zones and get phone calls in the middle of the night.
What is the worst part?
It can get quite monotonous. Sometimes you do a report and you think “I’ve just done this 20 times already.”
What are the career prospects?
The best progression would be to go into planning for the whole group – do corporate strategies, business planning, business development. Then you become someone who calls the shots from behind the scenes. You are a backroom person but involved in decision-making.
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