Operational Risk Officer Interview Questions and Answers

Trades are associated with various risks such as market risk, credit risk, liquidity risk, operational risk, and legal risk.

• Market risk: the risk of loss due to changes in market conditions

• Credit risk: the risk of loss due to counterparty default

• Liquidity risk: the risk of loss due to inability to sell assets quickly

• Operational risk: the risk of loss due to inadequate or failed processes, systems, or human errors

• Legal risk: the risk of loss due to non-compliance with laws and...read more

There are different types of traders such as day traders, swing traders, position traders, scalpers, and algorithmic traders.

• Day traders buy and sell securities within the same day.

• Swing traders hold securities for a few days to a few weeks.

• Position traders hold securities for a longer period of time, usually months to years.

• Scalpers make multiple trades in a short period of time to profit from small price movements.

• Algorithmic traders use computer programs to execute trades ...read more

Trade lifecycle refers to the stages involved in a trade from initiation to settlement.

• The trade lifecycle includes pre-trade activities such as trade idea generation and order placement.

• It also includes trade execution, confirmation, clearing, settlement, and post-trade activities such as trade reporting and reconciliation.

• Each stage of the trade lifecycle involves different parties and systems, and presents different operational risks.

• For example, trade execution may involv...read more