What skills and qualifications do you need for a career in financial risk management

Even though risk is a support role in a financial services firm, it still requires a similar educational background to the front office. The specific background depends on what kind of risk professional you want to be.

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Our previous analysis of risk interns in banking found that the most popular degrees were economics and finance, the same as you might expect of an investment banker. Functionally, there's some crossover between the role of a risk analyst and a banking analyst; an opening at BNP Paribas says one of the key duties of risk interns is to prepare reports and analysis for committees in its corporate and investment bank. In risk, though, instead of pitching to clients, you're talking to trading colleagues about whether proposed trades or broad strategies are too risky. For quant risk roles, particularly in markets divisions, mathematics and other STEM subjects are common.

The grade expectations are the same as front-office jobs on paper; JPMorgan expects a minimum GPA of 3.2 for its risk graduates, equivalent to a 2:1 in a UK university. You'll need some impressive extracurriculars, or to be at a particularly good school, to stand a chance at that minimum boundary

There are additional qualifications that can supplement your risk career, too. Some risk professionals carry a Chartered Financial Analyst (CFA) qualification; it's a very difficult qualification to obtain due to its ruthless testing structure which can require over 900 hours of studying. It will help you stand out in any role which requires some grunt work but, ironically, charterholders have told us the technical knowledge obtained from the qualification isn't nearly as impressive to employers as the grind it took to obtain it.

Qualifications specifically relevant in the field are the Financial Risk Manager (FRM) qualification and the Professional Risk Manager (PRM) qualification. These are usually in the 'preferred' section of job descriptions rather than 'required.'

What skills do you require for a career in risk?

If you want to work in risk, you'll need a core level of analytical/quantitative competency, which you're likely to get from your degree. This is especially true today as AI tools allow you to analyze much richer datasets. In the event you've picked a less quantitative subject at degree level, you will still need to understand how to use contemporary AI models to analyse data. And the more senior you become, the more you will also need an understanding of exactly why these models have reached particular conclusions. 

There are different areas of risk, including operational risk, market risk, issuer credit risk and counterparty risk and the skills required for each are different. Operational risk is the least quantitative field within risk, but it can require an understanding of technology systems and cybersecurity given the evolving complexity of cyber-attacks. It's often more complex than that. For example, hedge funds and private equity firms were recently targeted by a mass wave of voice phishing attacks using AI-generated voices to bypass otherwise robust cybersecurity systems. You can also study notices issued to financial services firms by regulators like the FCA, which provide detailed breakdowns of operational risk in action.

Different subsections of credit risk require different skills. Counterparty credit risk, for example, is dependent on market conditions and therefore it helps to understand markets. Issuer credit risk is more focused on financial statement analysis because these statements reflect a company’s financial health. Therefore, here, an understanding of basic accounting is essential. 

Risk jobs are increasingly quantitative. In quant risk jobs associated with markets, it's best to follow career advice offered to quant researchers, given that your role will be to manage the performance of traders like a trader manages the value of assets. Giuseppe Paleologo, former head of enterprise risk for Millennium, said in 2024 that you should read up on statistics, probability and linear algebra. As for soft skills, Paleologo said that you should have curiosity, creativity, humility and integrity.

Communication is important in any risk role, as your main duty is to explain how the actions of your company are affecting its risk profile. Quant risk staff in a hedge fund might discover overlapping strategies between two pods, but changes are made on a discretionary basis by management. It's your burden to convince management to fix such issues. You'll need thick skin for this too. One risk professional in a bank told us this year that "no risk MD wants their team to be viewed as the reason a multi-billion-dollar transaction is delayed or jeopardised."

As risk jobs converge due to AI, you might find yourself having to use AI tools to help you cover the work of a departing colleague. It helps, then, to have a good understanding of prompt engineering and AI risk principles. Goldman Sachs said in a 10-K filing last year that using LLMs in fields that require quantifiable and explainable actions can "harm [its] reputation and public perception" as well as casting doubt on "the effectiveness of [its] security measures," if done improperly. If you're not comfortable showing management the prompts you used to come to a conclusion, it's probably not a good conclusion.

Return to our guide to careers in risk management.

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