Last updated 18/05/2023
Have you always felt attracted to analyzing the potential losses in the financial sector of an organization? If yes, then Risk Management is totally the career field you should be opting for.
Risk management is basically the identification, evaluation, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives) followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events or to maximize the realization of opportunities.
You would be surprised to know, even during this COVID19 crisis time, if you search for a risk management job, naukri.com shows you 101K results! Understand the demand now?
But higher the demand is, tougher the interview questions are. Hence, we have jotted down the top 20 Risk Management interview questions just for you!
Here you go!
Answer : Managing enterprise risk at a strategic level requires focus, meaning generally emphasizing no more than five to 10 risks. Day-to-day risks are an ongoing operating responsibility.
Answer : The enterprise-wide risk assessment process should be responsive to change in the business environment. A robust process for identifying and prioritizing the critical enterprise risks, including emerging risks, is vital to an evergreen view of the top risks.
Answer : Once the key risks are targeted, someone or some group, function, or unit must own them. Gaps and overlaps in risk ownership should be minimized, if not eliminated.
Answer : A robust process for managing and monitoring each of the critical enterprise risks is essential to successful risk management, and risk management capabilities must be improved continuously as the speed and complexity of business change.
Answer : Cultural issues and dysfunctional behavior can undermine the effectiveness of risk management and lead to inappropriate risk-taking or the undermining of established policies and processes. For example, lack of transparency, conflicts of interest, a shoot-the-messenger environment, and/or unbalanced compensation structures may encourage undesirable behavior and compromise the effectiveness of risk management.
Answer : A company can fall so in love with its business model and strategy that it fails to recognize changing paradigms until it is too late. While no one knows for sure what will happen that could invalidate the company’s strategic assumptions in the future, monitoring the validity of key assumptions over time as the business environment changes is a smart thing to do.
Answer : The risk appetite dialogue helps to bring balance to the conversation around which risks the enterprise should take, which risks it should avoid, and the parameters within which it should operate going forward. The risk appetite statement is decomposed into risk tolerances to address the question, “How much variability are we willing to accept as we pursue a given business objective?” For example, separate risk tolerances may be expressed differently for objectives relating to earnings variability, interest rate exposure, and the acquisition, development, and retention of people.
Answer : Risk reporting starts with relevant information about critical enterprise risks and how those risks are managed. Are there opportunities to enhance the risk reporting process to make it more effective and efficient? Is there a process for monitoring and reporting critical enterprise risks and emerging risks to executive management and the board?
Answer : Does the company have response plans for unlikely extreme events? Has it prioritized its high-impact, low-likelihood risks in terms of their reputational effect, velocity to impact, and persistence of impact, as well as the enterprise’s response readiness?
Answer : To provide input to executive management regarding critical risk issues on a timely basis, directors must understand the business and industry, as well as how the changing environment impacts the business model.
Answer : Without assigning someone clear accountability for the process of risk management, it is unlikely that risks would be identified, prioritized, and mitigated across an organization on a periodic basis and in a thorough way. In addition, it is unlikely to risk would be given the focus that is required to achieve a reasonable degree of control over the many uncertainties facing organizations in today’s highly dynamic marketplace.
Less important are such details as the title of the individual with the accountability or how large a budget or staff the individual is provided. A name, an accountable person is a key to ensuring that a sound process is in operating.
Answer : Given that failures are generally caused by a strategic risk that has not been addressed rather than by a catastrophic storm or single cyberattack, for example, it is vital for organizations to know and deal with their strategic risks.
Strategic risks typically involve aspects of the business such as:
Answer : Strategic and non-strategic risks of a certain magnitude should be combined into one risk register that allows management and the board to see:
The board should expect to see such a report or ask for one, if it is not already being created.
Answer : These should be top of mind for the organization’s senior team at all times and be a familiar topic of discussion with the board. Board members should consider if these make sense based on all the information they have been privy to about the organization.
Answer : If managing risk is really important to the organization, the individual performance plans of a large number of employees at different levels of the organization should include a specific objective or task related to risk management. Thus, the performance against these would be evaluated at regular intervals. It is well-known that what gets measured gets managed, and what gets rewarded gets attention.
Answer : Clear accountability for the task of ensuring IT security is also critical. With the risk of cyber breaches, demands for service, extortion, and stealing of bank accounts and intellectual property so high, an organization needs to ensure it has the necessary expertise to create a secure technological platform. This can be in the form of hired staff or expert contractors.
In the case of some recent, high-profile breaches, it appears that the role of chief information security officer (CISO) was either non-existent or that the individual filling the role was brand new. An inference can be drawn that a seasoned CISO who understood the organization might have made a difference.
Of course, having the role filled does not guarantee never having a security risk comes to fruition. But it does reduce the risk to some extent, and having a CISO makes the discovery and recovery from a breach or attack quicker and more efficient when one does occur.
Answer : The answer to this question will give the board insight into several things. If there is a hot-line, it shows that the organization is seriously interested in identifying risks and that the topic of risk is being handled fairly transparently within the organization. If there is not one, the board may wonder why there is no channel for the rank and file to alert management about risks.
Answer : Large and small organizations, alike, have the potential to harbor correlated risks. Correlated risks are a group of risks that might occur at the same time because there is a relationship of some sort among them. The aspect at play could be:
A correlation might also be in terms of chain reactions. One risk event may give rise to other risks, which is often true in the case of natural disasters such as earthquakes and hurricanes.
A question about correlated risks will not only elicit an answer about those risks but also provide insight as to whether the risk is being discussed in-depth and across organizational silos.
Answer : No matter how robust a risk management process is, a company will experience catastrophes of one sort or another from time to time. There is a need for plans that deal with these because reaction speed is critically important in managing them well.
The business continuity plan has the aim of keeping all or some of the business running from another venue or with back-up systems or on-call staff, or whatever allows continuous operations. The disaster recovery plan has the mission to restore normal operations as quickly as possible after the business has been interrupted in whole or in part.
In reviewing these plans, key elements to look for include:
Insurance can be an effective and efficient way to handle risk when it is used in a well-constructed fashion. The board will want to consider high-level issues such as:
A way in which the board can judge the merit of the answers to these questions is to find out:
There are, undoubtedly, other questions that the board may need to ask. These are an excellent starting place for getting a sense of how well the organization is addressing risk.
Do you feel that this is all you need to know in order to crack your Risk Management interview? Umm, not quite. Wanna know what else would you need? Join our Certified ISO 31000 Risk Manager training sessions, and we will tell you!
NovelVista Learning Solutions is a professionally managed training organization with specialization in certification courses. The core management team consists of highly qualified professionals with vast industry experience. NovelVista is an Accredited Training Organization (ATO) to conduct all levels of ITIL Courses. We also conduct training on DevOps, AWS Solution Architect associate, Prince2, MSP, CSM, Cloud Computing, Apache Hadoop, Six Sigma, ISO 20000/27000 & Agile Methodologies.
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