Operational Risk Officer Interview Questions and Answers

Effective systems for trade compliance include monitoring, reporting, and risk assessment tools to ensure regulatory adherence.

• Trade Monitoring Systems: Tools like Bloomberg or Reuters that track real-time trades for compliance.

• Risk Assessment Frameworks: Systems that evaluate the risk associated with trades, such as Value at Risk (VaR) models.

• Regulatory Reporting Tools: Software that automates the generation of reports required by regulatory bodies, e.g., MiFID II compliance...read more

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