It is a good idea to practice interviewing. By doing this, applicants gain security, scare away nervousness and recognize in good time what weaknesses they still have.
So, where do you start and where do you stop when practicing for a job interview? You should practice self-presentation and prepare answers to standard questions. In case you practice and gain confidence in these exercise variants, nothing stands in the way of a successful job interview. These are the top 30 risk management interview questions with answers.
1. What Does Risk Management Mean?
Risk management summarizes all actions and decisions of a company related to the correct handling of risks. You first need to identify possible dangers for the company. This also includes all subsequent steps up to the final planning of further action. Risk management is therefore concerned with analyzing and reacting to hypothetical, negative events that a company may face in the future.
2. What Is One Thing That Working With Risk Management Has Taught You?
Risk management can sometimes feel abstract as you often work with imaginary scenarios. This is also the reason why risk management is often neglected. After all, there is still no acute trigger that forces action. Rather, possible difficulties in the future are considered. Many times, a company does not take the dangers seriously enough – until the worst comes to the worst and there are no solutions to the problems. However, risk management should not only be understood as a tool for companies. You can also use the same methods and principles for yourself when you face risks. It does not matter whether it is professional decisions about choosing a career and changing jobs or private situations that are associated with uncertainties.
3. How Important Is Risk Management In Corporate Governance?
Risks are just as varied as the banking business itself. This means that risk management and risk control as well as awareness of them play an important role in successful corporate management. The main task of the risk manager is the targeted identification and assessment of risks, such as market, credit, or operational risks. All this requires efficient communication, not only with and among employees. But also with the supervisory authorities who monitor compliance with all regulatory requirements, such as Basel II and III.
4. Can You Briefly Explain The Process Of Risk Management?
Every company uses risk management a little differently, but basically, the process always remains the same and consists of five stages. How these are designed in each case depends primarily on the respective strategies and goals of risk management. In some areas, every risk should be avoided as far as possible, others pursue the goal of only achieving risk reduction while accepting a certain residual risk. It is also conceivable to outsource an existing risk by taking appropriate measures, for example to a business partner or at least dividing the risk and halving your own risk.
With the goal in mind, you can then move on to the risk management process:
- Plan Risk Management: The risk management process describes a dynamic process that is broken down into sub-processes. Successful planning of risk management also depends on the entire process being part of business activity as a matter of course and never be viewed as fully completed. It is not without reason that the saying goes: danger recognized, danger averted.
- Risk Identification: Risk identification aims to identify developments at an early stage that could harm the company. This includes, in particular, facts such as risky transactions, loss of production, and violations of the law that can damage the company’s assets, earnings, and/or financial position.
- Risk Analysis: To get a complete picture of the risk situation, it is important that you now carry out a risk analysis or assessment. You now evaluate the identified risks for your company based on two criteria: extent of damage and probability of occurrence.
- Plan Risk Responses: After the risk assessment has been completed, the development of the appropriate risk strategy follows. This is about determining the necessary actions. You should weigh up whether the effort involved in implementing a measure is worth it to the existing risk. The focus is on which measures should be taken to effectively control your risks.
- Risk Monitoring and Control: Risk monitoring is a continuous process. You have to pay attention to the following indicators: Have situations arisen or are foreseeable that will trigger the occurrence of the risk? If you recognize such a threat situation, check whether the measures you have defined for defense have been implemented as decided. You also check whether the measures are sufficient to counteract the occurrence of the risk.
5. How Do You Identify The Possible Risks?
The first step in risk analysis is always to identify potential risks and dangers. Where are dangers lurking? What could go wrong? What difficulties might arise? And what impact could that have? The simplest way to identify risks is the worst-case scenario. Think about what could happen in the worst case. Go through a project or decision and paint everything black. So you know exactly where to expect a possible risk.
Numerous methods are available that support the identification of risks such as SWOT analysis, PEST analysis, checklists, early warning systems, the involvement of experts, or classic brainstorming. The insights gained from workshops and interviews, benchmark analyses, and information from other internal and external data sources support the creation of a database with all relevant risk information. The risks are categorized in such a way that they can be assigned to the correct dimension of the risk model.
Especially if you run a small business and have employees, holding a brainstorming session with senior management and all key people present is crucial. The exchange of ideas serves to record all risks and to examine them from different perspectives. Open criticism should be welcomed. Otherwise, the situation could arise where the brainstorming comes to nothing because employees are biased and fear consequences if they express their honest opinions. It can also be helpful to involve external sources of information such as auditors, tax consultants, or industry associations. Due to their distance from the company, their assessment is more objective and reduces the risk of overlooking important facts due to operational blindness.
6. Can You Give Us Some Tips You Use For Successful Risk Management?
To ensure that your risk management is successful, I turn to three important tips that help me with the implementation. First, I customize risk management. There can be no generally valid solutions for successful risk management. The goals and the requirements are far too different. While you may be perfectly willing to take a risk when the potential reward is right, others are risk averse. Risk management can only work individually if both goals and measures are tailored to the respective situation.
Then, I try to be as realistic as possible. Neither optimism nor pessimism is helpful in risk management. What is needed are observations that are as neutral as possible, based on facts, and do not rely on wishful thinking or pessimism (other than identifying possible risks). If you just try to talk yourself into it, you ignore imminent risks and may run straight into big problems without noticing them in time.
And lastly, I do not just rely on myself. Even if you want to do everything yourself, it is advisable to rely on the knowledge and opinions of others when managing risk. For example, ask experts and consultants. They can draw a more accurate picture of the possible risks and also know how best to deal with them.
7. Why Are Companies Afraid Of Taking Risks?
Several factors are to blame for this, which are unfortunately difficult to control. The first thing is that negative consequences are overestimated. If we stand by a risk, judgment becomes clouded and a clear view of things is lost. Instead, we focus more on the negative consequences, imagine a worst-case scenario, and keep convincing ourselves that this will happen.
Also, uncertainty breeds fear. It is like the risk that the outcome of the situation is uncertain – which frightens many people who prefer to only tackle changes when they have complete control over them and can determine the outcome.
And in the end – mistakes and failure are taboo subjects. We live in a meritocracy where failure and defeat are frowned upon. Only successes, achievements, and victories count. Anyone who takes a risk exposes himself to the danger of losing his status and being labeled a loser.
8. What Are The Steps Needed For Risk Analysis?
Risk analysis deals with the question of when risk is bearable and can therefore be accepted by the risk owners. For this purpose, a risk tolerance limit is often drawn into the risk landscape. It could be said that risks above this limit should in principle not be tolerated, whereas risks below this limit are acceptable. The risk analysis is usually carried out in two dimensions:
The probability of occurrence describes the probability of an event occurring. Normally, a three-year cycle is assumed for the probability forecast. If the company has a strategic planning cycle, this period is usually used as a base.
The impact describes the effect that the occurrence of an event can have. A financial value is usually assumed for the assessment. Since not every risk can be assessed financially, there is also the possibility of assessing risks qualitatively. This can be done, for example, in terms of reputational, compliance, health and safety risk, or the effort required by management to control the situation should an event occur.
The risk categorization simplifies the risk analysis, in particular the assessment of a risk capital requirement and the recording of diversification effects. The risk categorization into risk types enables control with appropriately tailored measures and tools. Different management methods for risk analysis can be used in the company. These serve both to uncover risks and to form the business and risk strategy (e.g.: value chains, SWOT analyses, benchmarks, etc.).
9. Explain Swot Analysis
The SWOT analysis is an instrument for determining the position and strategic planning of companies. The strengths and weaknesses (internal company characteristics), as well as the opportunities and threats (external environment analysis) of the company, are presented in a matrix or table. It was developed in the 1950s at Harvard Business School for processing case studies.
The term SWOT is an acronym and consists of the first letters of the English words “Strengths”, “Weaknesses”, “Opportunities” and “Threats” (risks) – the SWOT categories. The analysis tool can not only be used for strategy development but also for personnel and management development. Even to apply.
10. What Are Some Common Uses For A SWOT Analysis?
Some areas where you can use SWOT are:
- Competitor and market analysis (marketing)
- Business plan (founding a company)
- Management development (strengths and weaknesses profile)
- Personal development (self-image, external image)
- Team and personnel selection
- Employer branding (employer selection)
11. How Much Do You Use Digitalization In Risk Management?
For us, a lot revolves around digitalization and IT. How can we automate things in risk management, build interfaces and implement new applications? These are classic questions of my everyday life. I deal a lot with how we can further develop digitization in risk management and take it to the next level. Around 80% of my projects deal with it. As a result, I exchange ideas with other colleagues and experts. That made the whole thing very diverse and is a special feature of my job.
12. In Your Opinion, What Are The Keys To A Correct Implementation Of A Risk Management System?
The most important, from my point of view, is to adapt the management system to the peculiarities and specificities of the organization. No two organizations are the same. Each organization has specific decision and management processes, even within the same organization, the processes may differ depending on the nature of the activities that are addressed. The key is to adapt the system to the needs and characteristics of the company.
13. How Close Is Theory To Practice In Risk Management?
Prevention models are easy to understand from a theoretical point of view and easy to formalize. What is difficult and laborious is to put them into practice in business, so that they are part of the decision-making processes. Compliance must be integrated into business processes, if it is a parallel process alien to business reality, it becomes what the Americans call a “paper program”, that is, programs that only exist on paper.
No need to reinvent the wheel. It is necessary to identify and take advantage of the control systems that exist in the company, make the necessary adjustments by establishing new controls, and integrate them into a common framework. In this way, employees make it their own, understand it and participate in it naturally. And for all this, it is essential to know the company, the business, and the people well.
14. Why Is It Essential For A Large Company To Have A Risk Manager?
I see it as difficult for a company to have sustainable growth without an adequate risk management policy. The challenge is to achieve the coordination of the different business units so that the strategy and policy against risks are developed in an integrated manner throughout the entire organization. The development of training plans and the continuous analysis of risks to keep updated on new threats and, finally, the establishment of increasingly agile and effective management systems are, in my opinion, essential for achieving sustainable growth of any business organization.
The Risk Management departments have a great responsibility before them, as they must become engines for innovation and the incorporation of solutions that go beyond mere financial transfer. On the other hand, they must continue to offer excellent service at all levels, from placement to claims management.
15. How Has The Role Of Risk Managers In Large Companies Evolved In Recent Years?
Today, one of the main challenges faced by Risk Managers is the complexity of implementing international insurance programs from the point of view of compliance and control. In this sense, the role of the insurer takes on special relevance, which, through its local companies and its associated Service Network, must advise the Client, guaranteeing compliance with the legislation in the different jurisdictions that make up a complex insurance program.
Another challenge is related to the advancement of technology, which is causing a constant evolution in risks and forces the risk manager to be alert to the evolution of the market and the accident rate in the sector. This is also a challenge for the insurance market itself, as is seen in the limited supply of risks such as cyber.
16. Explain The Role A Risk Manager Has
As a risk manager, it is your job to identify, analyze and control possible risks for your company. A risk manager runs through possible scenarios to prevent dangers at an early stage, conducts interviews with experts, and draws up balance sheets, checklists, and damage statistics. In a bank, a risk manager examines the risks of stocks and securities as well as the creditworthiness of customers.
The risk manager aims to support the company management in important decisions and thus the further development of the company. The risk manager takes preventive measures and makes recommendations. In case damage occurs, it is up to him to keep the effects to a minimum.
17. Name Some Duties You Expect To Take On Working In This Position
I will detect, analyze and control the possibility of damage or loss using systematic procedures. Then I will evaluate the risks in the financial sector. For example, lending, investment transactions, or insurance issues. I expect to predominantly use mathematical methods and models in finance and the insurance industry. I will even take specialty job positions if needed, such as risk analyst or risk controller for individual task sectors. I believe that the transition from the tasks of certain risk managers to those of the compliance officers, who monitor compliance with laws, articles of association, regulations, and directives in companies, is fluid. I am ready to tackle different job roles and duties depending on the situation.
18. The Risk Manager Is A Figure That Is Increasingly Present In Organizations, What Profile Should They Have?
The profile of the person responsible for compliance must be multidisciplinary. Since compliance is one more business process, like the rest of the processes, it has three fundamental components. These are technical, regulatory, and economic, so it is necessary to have skills in each of these areas.
The technician is associated with skills related to risk assessment, process analysis, and the design and implementation of control activities. A good compliance model rests on an accurate assessment of the compliance risks associated with the company’s business processes.
Regarding the regulatory component, it is necessary to know the regulations related to the company’s activities and the consequences of non-compliance.
And finally the economic one. The model cannot remain on paper, it must be implemented and integrated into the organization’s business processes most effectively and efficiently possible. So, it is necessary to have an adequate financial flow control system that allows reducing the risk of committing illegal acts.
These three areas of competence, together with the leadership and management skills necessary to involve the organization in achieving common goals, would form, in my opinion, the ideal profile of a risk manager.
19. What Is The Difference Between A Risk Manager Or Specialist And A Risk Analyst?
A risk specialist is synonymous with a risk manager. He is responsible for all risk management processes. From risk management planning, identification, analysis, response planning, and execution, as well as risk monitoring and communication. The specialist must have various types of skills, both technical and human. I would say that these humans are super important.
On the other hand, a risk analyst has a limited function which is the quantitative analysis of risks. It is performing simulations and reporting their results. To do this, he uses advanced techniques of the Monte Carlo type, scatters diagrams, and tornado graphs, among others. For this, knowledge and experience in statistics and probabilistic distributions, among other related topics, are essential.
20. Do You Have Experience With Risk Management Software And Data Analytics Tools?
I use Excel or other tools for the consolidation, cleaning, analysis, and reporting of data and information on risks. Many times this information is available and processed in large volumes, especially in megaprojects. Sometimes I do not use Excel-type spreadsheets, but rather risk software. Frequently this software is basic and it is necessary to end up analyzing information outside of it. In cases where there is world-class risk management software, these generally already include control or command panels, dashboards, and reports that facilitate this task. But this type of software usually involves high investment and not everyone has it available.
21. What Education Do You Have?
I have a master’s in industrial mathematics and then specialized in Financial Mathematics. I completed an apprenticeship at the bank. From there I started working in risk management and control.
22. What Skills Do You Have?
Not only do I have analytical and mathematical skills, but I also am above-average resilient. In difficult situations, I react rationally. I possess the critical look that is a must in day-to-day work. I also have good communication skills and strive to be in contact with employees and management every day. I am down-to-earth and have a well-established personality. I am confident and can communicate with different hierarchical levels on an equal footing. I effortlessly manage to maintain an overview and set priorities in complex processes and stressful times. I am particularly willing to follow developments relating to the economy, politics, the environment, and world affairs and to develop further. Because my judgment and ability to manage risk are vital to the success of the company I work for.
23. How Did You Come To Risk Management?
The choice of career happened rather later. As I mentioned I have a master’s in industrial mathematics. That was partly very theoretical, which is why I also studied economics. In time I realized that I wanted to go into the financial sector. A position then became available at the bank. And I applied immediately. The interview was very positive, I felt comfortable there. That was in 2015 and to date, it has proven to be right for me. In recent years I have developed a lot – professionally and privately. And for that, I am very grateful.
24. Is There Anything Else You Particularly Like About Your Job?
Every day is different – the only constant is the morning 8 a.m. call with my colleagues. So my days are never planned, so you should be a flexible and spontaneous type. I also like to take responsibility for projects. I like it when I work with a large group of different people. Combining the different opinions that flow in there and achieving a specific goal together –is very exciting
25. What Is Your Biggest Motivation?
The greatest source of motivation for me is the daily challenges. This vagueness, this variety, coupled with the knowledge that a problem can arise in risk management at any time that has to be solved in the shortest possible time – this challenge drives me and motivates me a lot.
26. Do You Have Leadership Skills?
As a risk manager, you must inspire and generate trust and respect in your colleagues. The risk owners need to open up with the specialist and be transparent about the information they provide about the risks and their status. It is common to attempt to minimize, disguise or draw the reality away from the risks. Not everyone wants to tell the specialists the truth about the state of the risks. You do not want to assume or communicate when you have failed to treat a risk or seek to blame. You must seek lessons, learn and not fail again. As a risk manager, I have the necessary skills and knowledge of the project and its status. That is necessary to be able to question and seek people to be open and transparent in communicating risks.
27. What Is Your Main Value When It Comes To Work?
Commitment. All the people who work must be committed to their work. For this, it is necessary to establish a suitable work environment. If there is harmony and the thought of being in the right position, the commitment will come by itself.
28. What Do You Prefer, Working Alone Or In A Team?
A risk manager knows the importance of both. Teamwork is crucial to achieving results, and there are times when you must work individually. Some jobs require only one person.
29. What Have You Learned From Your Mistakes?
That you should always look for the positive part of everything. Making mistakes or falls is always a lesson to not make that mistake again. That serves as an impetus to achieve new goals.
30. What Would You Do If You Have Problems With An Employee?
The best thing would be to talk about it and look for solutions. I like to treat each problem from the beginning. In that way, it does not escalate. I am one of the people who seek to settle issues from the start and more so in specific cases. I always think about the interests of the team.
When it comes to responding to a job interview for a risk manager, do not be nervous. Answer each question honestly and calmly. But do not be overly humble. In an interview for a risk manager position, you must know how to sell yourself.
Interview questions for a risk management job vary depending on the type of company. Regardless, in all of them, recommendations, previous experience, and, above all, your achievements in directing groups of people will be decisive. We wish you good luck!