My Experience as a Market Risk Analyst
Post any questions you may have and I'll do my best to answer!
There doesn't seem to be much information on this website regarding this niche role so I'd like to just expand on this and hopefully future readers can gain insight on this function.
Market Risk Analyst Position Overview
I interned this past summer in Market Risk at a top BB (GS/MS) and I think the role is great if you want to make a decent living with great hours.
As an analyst, I covered two equity trading businesses and you primarily analyze the risks that the traders take in using VaR and stress tests. You'll look at PnL changes day over day as well as your exposure to equity delta risk, interest rate risk, credit risk, etc. There was definitely some interaction with front office Strats as well as other groups within Finance including credit risk, controllers, and corporate treasury. The work is interesting in the fact that you are able to learn a lot about the markets and see the risk side of things that the traders don't see. Traders usually look at the traditional trading greeks while we looked at VaR and stress tests.
Some of the other interns that worked with me covered other desks like mortgages, interest rate products, credit products, etc. They learned a lot about their own businesses and during the summer a few full time analysts lateraled into S&T.
It actually isn't too quant intensive as I thought it would be. Most of the work is done in Excel and some prop software like secDB. Strats do more of the quant work.
Some parts were definitely boring though. Lots of internal process work for SOX, Volcker, Basel, CCAR, etc and compiling different kinds of risk packages on legal entities to internal risk committees, SEC, and the FRB.
However, a misconception is that it is a supporting role. It is definitely not a supporting role. Market Risk does not support or report to the front office. The Market Risk team reports directly to the CRO of the company. In fact, the group I interned at had our own support teams in the Technology division.
Compensation - in NY base started at 80k + 10k sign on, I'm guessing bonus would be around 15-25k
Hours - 8-8 usually with no weekends. There will be the occasional 10pm night but it is rare.
It gets a lot better when you move up the ladder though. All the VPs and up I worked with left by 5-6 pm.
Sure, compensation flattens out but work life balance gets a lot better and it's not a stressful job at all.
Post any questions you may have and I'll do my best to answer!
5 Intriguing Insights From A Market Risk Analyst
Although it is little discussed in most financial circles, a career in market risk can be both lucrative and fulfilling. Due to its lack of publicity, there is a deficit of knowledge on the subject. This leaves prospective market risk analysts full of questions. Luckily, Wall Street Oasis has users with experience in nearly every financial field imaginable. User @Communist", a consultant, answered questions on topics ranging from market risk analyst salary to moving to and from jobs in market risk. Here are the top five takeaways:
Market Risk Analyst Salary
Let's face it. Money makes the world go round, and it is likely one of the primary reasons you are pursuing a life in the world of finance. Market risk analysts make slightly less than IBD analysts in base pay. In 2016, the IBD base pay was 85k while the market risk base was 80k. Because of the difference in functions between the two, market risk analysts also do not get quite as much in bonuses. All in all market risk analysts can hope to net between 105k to 115k in total compensation. While the pay may be slightly lower, later you will see why a lower stress factor and greater freedom could make it worth your while.
Market Risk Analyst Workload
Market risk analysts have a very diverse workload. User @Communist", a consultant, spends about 20-30% of his time with risk reporting. 50% of his work (including risk reporting) is spent with regulatory work. The other 50% is more variable. Risk production, account integrity, and projects. The projects are extremely interesting as you have immense amounts of freedom. You are also allowed unlimited access to the front office prop software which is what the traders use to book their trades. Pertaining to the amount of workload, market risk analysts have among the best hours.
Moving in And out of Market Risk
More often than not, market risk analyst positions are filled by students that are nearing graduation. It is usually not necessary to go to grad school to land a job, but some roles may be a bit more difficult and the extra education could be a plus for technical skill development. In regards to moving out of market risk, there are varying exit opportunities. You can lateral into things like structured finance IBD and securities. Many people will go to business school to further their career. If you are talented enough you can go into consulting and make great money even outside of NYC.
Necessary Skills for Market Risk
Both qualitative and quantitative skills are needed for success as a market risk analyst. If you want to go into something technical like financial modeling you'll need some knowledge about things like software. In fact, many financial modeling interns are currently studying masters in computational finance or financial engineering. For a more qualitative roll like market risk analysis for equity trading you will need to be able to perform functions like analyzing VaR and stress and working on account integrity.
The Downsides of Being in Market Risk
While this post includes many of the positives of being in market risk, it would be dishonest to tell you that there aren't any downsides. The first is that, if you don't like NYC or don't want to live there, you're outta luck. It's cold, unfriendly, expensive, and definitely not for everyone. On the flip side, many people consider it the best city on earth. It is also one of the lower paying jobs in this field of work. That, coupled with the expensive location, means that you will not quite live the extravagant life of your peers. The last downside is that you do not learn as much about the traditional trading side of things so your future career options are a little more limited.
Read More About Market Risk on WSO
- Market Risk Vs Credit Risk Management
- Market Risk Vs Counterparty Risk
- A Career In Market Risk
- Wham! Cheer! Sue! Football and Market Risk Premiums
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