What does a Risk Management Analyst do?

The risk analyst looks at things in terms of the level of risk being taken, where are the risks in portfolio, what could go wrong in a portfolio, what is the risk utilization of a portfolio is relative to the risk budget or tolerance. While a lot of the same skills are associated with being a portfolio manager and a risk analyst, they are different. A risk analyst focuses on how is a risk budget being used, what can go right or wrong, not necessarily maximizing the returns of a portfolio. Are they good investments per se, but is there too much risk being taken or not enough risk being utilized, what are the risks and chances of the portfolio going pear shaped and whether the portfolio manager is constructing a portfolio that is consistent with what the client wants to achieve. Some of these things are similar but they are different.  A risk analyst may also think about counterparty exposure, collateral management, liquidity management, yet again some of these things are going to be very similar but they are going to be more quantitative and based upon setting parameters and what the maximum risks should be not necessarily how to optimize what they offer given market condition. They also may be looking at multiple portfolios across strategies and across portfolio managers. They will be looking for consistency in that construction and to look at how PMs are doing in different strategies given their risk budget and looking at how consistent things are. One of the things that a risk manager is going to be potentially concerned about is dispersion risk for similar strategies and similar managers, or different managers because one of the things that a risk manager needs to do is notify senior management that similar returns for the same strategy are not consistent even though there may be different PMs.

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