How to Become a Credit Risk Manager

Intro Credit Risk Manager

About Credit Risk Manager

Credit Risk is the possible loss that a financial institution might have to suffer because a borrower fails to make payments on a loan. The job of a Credit Risk Manager is to ensure that the credit risk is minimized and the bank or any financial institution is able to recover from any losses that might occur.

A credit risk manager uses several strategies in his / her daily work to minimize the risk of financial loss to a lending organization. The job involves implementing the correct strategies and policies for a financial institution with the motive reducing risk and increasing profits. These policies might involve steps such as looking for early warning signs in a borrower’s portfolio, limiting the resources available for lending etc.

Credit risk management requires a good understanding of finances and defining governing policies for loans. By implementing the required procedures for risk management, a professional credit risk manager not only is able to reduce the losses that a financial institution might occur but also enables these institutions to absorb the shock in case any losses do occur.

Apart from having an in-depth understanding of finances, a credit risk manager is often required to go through large amounts of data and should have good analytical, problem-solving, mathematical and communication skills. A credit risk manager should also be able to do their job under pressure and should be able to explain technical financial details in layman terms.

Eligibility to become Credit Risk Manager

In order to become a credit risk manager in India, a candidate should ideally have at least a professional degree in the field of finance, accounts, commerce etc. A Credit Risk Manager job is mostly offered to candidates who have certain work experience in a related position.

In order to take up a career as a credit risk manager in India, one must look for the following courses.

Undergraduate Courses for Credit Risk Management

• Bachelor’s degree course preferably in Finance, Accounting, Commerce etc.

• BBA / BBS / BMS degree course.

Postgraduate Courses for Credit Risk Management

• An MBA in Risk Management / Finance.

• Credit Risk Management Certification courses.

• PGD in Risk Management

Ideally, candidates should look for courses that impart skills in finance, financial analytics, business analytics, analytical tools etc.

Types of Job Roles Credit Risk Manager

Since lending is the main earning model for financial institutions, the credit risk manager plays a vital role in these organizations. A credit risk manager helps these institutions build and implement sustainable policies that can support their business, protect against fluctuations in a volatile market and management non-performing assets and liabilities. Any professional working in this position has to undertake varied responsibilities and tasks in order to fulfil their duty.

A credit risk manager must have an understanding of the company policies and needs, based on which he/she would form the required procedures and policies. Additionally, a professional in this role is required to coordinate with the sales department on a regular basis to establish a balance between the institution achieving its goals without compromising on security. Additionally, the job of a credit risk manager will also require him/her to analyse open or previous accounts to assess the performance of these accounts and mitigate in chances of risk.

Employment Sector/Industry for Credit Risk Manager

The services of a credit risk manager are required in any organization that relies on credit as a business model. Given below are the top recruiters for credit risk managers.

• Banks

• Non-Banking Financial Institutions (NBFCs)

• Insurance Companies

• Finance Consultancies

• Capital Management Firms

• Investment Banks etc.

Top Recruiting Companies for Credit Risk Managers

Given below are some of the top companies hiring credit risk managers in India.

• State Bank of India

• HDFC Bank

• CRISIL

• Morgan Stanley

• IndusInd Bank

• Citi Bank etc.

Pay Scale/Salary of Credit Risk Manager

Credit risk managers usually earn a handsome salary package in India. However, in the initial phase of this career, a candidate will be required to gain some experience of the BFSI sector in positions where the salary package might not be as rewarding. Professionals in this role must also keep in mind that a certain portion of the salary package for credit risk managers may also be incentivised based on performance. Hence, well-performing professionals in this field will be able to earn higher salaries. With experience and promotion, credit risk managers can earn enough money to afford a luxurious lifestyle.

Given below are the average salary details of credit risk managers in India.

• The average salary of a credit risk manager in India can be around Rs. 9 - 10 LPA.

• The salary for entry-level jobs in this field can range from Rs. 4 - 5 LPA.

• Professionals with 5 - 6 years of experience in credit risk management can command higher than average salaries in the range of Rs. 15 - 20 LPA.

• Professionals having 10+ years of experience can easily surpass the Rs. 30 LPA mark.

Books & Study Material to Become Credit Risk Manager

The table below provides the list of best books you can refer to while preparing for the field of credit risk management in India.

Pros of becoming a Credit Risk Manager

• Tremendous growth opportunities.

• The salary package improves tremendously with experience.

• Banks and financial institutions usually provide high job security.

Cons of becoming a Credit Risk Manager

• The workload can be variable and the job can get stressful.

• Professionals are often required to put in long working hours.

• The field requires a high level of expertise and postgraduate education is almost essential.