Capital Market Interview Questions - Overview of Risk Management - Sandeep Kanao

Q : What is risk

Two main constituents of risk

1. Uncertainty

2. Undesired consequences

Q : What is Sharpe ratio - Sandeep Kanao

Q What is the premise on which Capital Asset Pricing Model (CAPM) based

Capital markets work with absolute perfection

Q :  What is risk-adjusted return on capital (RAROC) - Sandeep Kanao

Q : What are the three broad areas covered by Basel accord

Credit Risk

Market Risk

Operational Risk

Q: What is Enterprise Risk Management (ERM)

The process of planning, organizing, leading and controlling activities of an organization in order to minimize effects of risk on an organization's capital and earnings.

Q:  What are different types of risks

Market risk

Credit risk

Liquidity risk

Operational risk

Legal and regulatory risk

Business risk

Strategic Risk

Reputation risk

Q: What are four major types of market risk

Q: What is default probability in credit risk - Sandeep Kanao

Q: What is credit exposure

Q: What is recovery rate

Q : What are the two dimensions of liquidity risk

1. Funding liquidity risk
2. Asset liquidity risk

Q:  Give some  examples of operational risk

Fraud, risk involved with computer systems, technological systems, human factors.