Since times immemorial this world has sought expansion. It will be not a wonder to say that the quest to expand one’s empire was the primary reason for battles and conflicts in the past era. It is true that circumstances have changed drastically and there are no more battles now, however, human psychology remains the same. Almost all corporate houses, entrepreneurs, and business organizations aim to expand their business operations and are always on the hunt for lucrative business opportunities. These business proposals are usually risky and the risk associated with them needs to be evaluated thoroughly so as to make an informed business decision.
A risk analyst is a specialized professional having superior financial knowledge who by analyzing, examining, and observing the books of accounts as well as cashflows of business organizations or a particular business proposal calculates the risk associated. Being a highly technical and responsible job a risk analyst usually fetches a high salary and lucrative incentives. It is for this reason that a single job opening of a risk analyst with a reputed business organization evinces interest from at least a hundred eligible candidates, thus requiring some sincere and serious effort.
21 Best Interview Questions To Study
Studying the frequently asked interview questions is one of the best ways to prepare for the interview process, and a list of some important questions is mentioned below:
1. Explain The Notion Of “Dividend Irrelevance”?
Being a risk analyst you will always be asked a few questions that will test your knowledge and understanding of the various models for the valuation of a business enterprise.
Sir, the dividend is a part of the profits and is extended to the shareholders as a reward for investing in the equity shares of the company. However, as per the Modi-Migliani Model of valuation of a business firm, this dividend is completely ignored. This model advocates that the investors are usually indifferent to the dividends and the valuation of a firm is not dependent upon the dividends distributed by a business organization.
2. What Do You Understand By “DCF” Technique Of Proposal Evaluation?
This question tests your knowledge and understanding of the core principles of business evaluations.
Sir, it is common for the business organization to expand and lookout for a few business proposals for possible mergers, acquisitions, or takeovers. These proposals must be evaluated and studied thoroughly to check their effectiveness and worth. By using the technique of DCF (Discounted Cash Flows), the various future cash flows expected to be generated are anticipated and are discounted using an expected rate of return. Post discounting, a present value of money is obtained that can be compared and equated with the upfront payments demanded by the business proposal in question.
3. Explain The Major Limitation Of Calculation Of PayBack Period.
This question will test your core commerce knowledge and your grip on the various financial evaluation models.
Sir, the payback period does not take into consideration the time value of money. Calculation of the payback period is simple and does not take into consideration the discounting cash flows, rather the normal future cash flows are considered. This leads to a non-accurate business evaluation and might lead to a manipulated business decision.
4. What Are The Software You Are Aware Of That Are Widely Used In Your Profession?
Technology is an important part of business houses and using software is pivotal. Thus, you must be aware of all the latest software used widely in your particular profession.
Sure, sir, these are:
- MS Excel (advanced level)
5. What Is Your Understanding Of Window Dressing Of FInancial Statements?
This question tests your knowledge and understanding of the various manipulations made in the financial statements.
Sir, financial statements or books of accounts are the best way to analyze the associated risk and worth of a business organization. However, at times these statements do not reflect a true and fair view of the affairs of the company as these are manipulated and window-dressed. There are several methods to window dress, which simply means intentionally hiding any fraud or misappropriation of money.
6. How Are Reserves Different From Provisions?
This question tests your knowledge and understanding of basic accounting and its practical application.
Sir, both reserves and provisions are made from the profits earned by the company, however, reserves are non-stipulated and are created upon the discretion of the business organizations. However, creating provisions is a mandatory aspect and is stipulated by the concept of prudence. Further, whenever an organization expects or anticipates any probable losses that will materialize in the near future, then it has to create a provision for the same on the basis of a pre-determined percentage. Also, an organization is prohibited from making any secret reserve.
7. What Is The Accounting Treatment Of – Interest Paid On Loan, Obtained To Purchase Machinery?
This question tests your knowledge and understanding of basic accounting and its practical application.
Sir, all the expenses paid to acquire and install a fixed asset are capitalized in the cost of the fixed assets purchased and are depreciated over the period of time using an appropriate depreciation method. Thus, in the instant case, the interest paid would be capitalized and added to the cost of the fixed asset.
8. How Do You Conduct A Financial Risk Assessment Audit?
This question tests your knowledge and understanding of the practical working procedures.
Sir, in order to conduct the risk audit of an enterprise, the following three areas must be effectively scrutinized, which are:
- Examination of liabilities recorded in the balance sheet and their source of origins
- Looking out for possible instances of evergreening of loans
- Internal controls of the company and the fund management procedures as well as their ultimate destinations
9. Which Is The Most Expensive Source Of Finance?
Being a risk analyst, you must be aware of the various sources of finance and risks associated with them.
Sir, business organizations are usually cash-starved and they need constant funds, which they rise from a variety of sources such as, equity financing, issue of debentures, external commercial borrowings, bank debt, etc. Of all the sources, equity financing is the most expensive source of finance, even though there is no fixed obligation on the company’s part. Equity financing holds the highest cost of capital and is usually avoided by a variety of business organizations.
10. What Can Augment The Credit Risk For A Business Organization?
This question tests your knowledge and understanding of the various types of business risks.
Sir, credit risk is associated with the cash flows of a business organization and can have a detrimental effect upon the organizations’ own liability to pay its creditors and suppliers on time. This can lead to a loss of goodwill and credibility, depleting the company’s chances of raising funds at a cheaper rate. Delay or failure of payments from the customer’s end, is the major reason for augmenting credit risk.
11. Explain The Relevance Of Low-Yielding Government Securities From Business Context.
This question tests your understanding of the practical working and operations of business organizations.
Sir, low-yielding government securities are safe and liquid. These are categorized as cash and cash equivalents in the balance sheet and are represented as most liquid assets. These are essential in maintaining the liquidity levels of business organizations.
12. A Risk Analyst Is A Busy Professional and Has To Execute Several Business Tasks. What Is Your Prioritization Stretegy?
This is a common interview question aimed at enquiring about your own prioritization technique that you follow so as to execute several business tasks in a time-bound manner. In case you haven’t developed any strategy yet, please refer to our exclusive post for a better understanding and guidance in this regard.
13. Have You Ever Done A Failed Risk Analysis? If Yes, How Do You Handle Failure?
Through this question, an interviewer wants to know about your technique of handling failure. It is evident that a professional would one day or the other fail in his or her career, which can have a devastating mental impact. However, you must be mentally strong enough to get out of the mess and move forward in your professional career. This is a common expectation and you are expected to share a positive reply. If you are looking for some sample answers, please refer to our exclusive post.
14. What Is Your Ideal Company Culture?
It is common for business organizations to work in a team setting rather than working individually due to better productivity and attached benefits. Thus, through this question, an interviewer wants to know what in your opinion is a perfect team or what is your expectation from your team members. Be genuine and original in your reply. For better clarity and ten unique sample answers, please read our targeted post.
15. “Quality” Is A Corporate Friendly Word. What Do You Mean By It?
This is a tricky interview question as you are required to explain a specific word. “Quality” is a term that is capable of several interpretations, and thus you are expected to share your own version of interpretation as an ideal response to this interview question. In case you are confused or lack the ability to deliver a perfect answer, please refer to our exclusive post, which will give you ten unique sample answers to choose from.
16. Risk Analysis Is A Stressful Job, Especially With The Numbers Attached To It. How Do You Manage Stress?
Stress management is a common expectation from employees nowadays. Business organizations operate in a dynamic environment and this stress of operations is ultimately transferred to its employees. This makes it tough and challenging for the employees to have a comfortable run. Hence, an interviewer always asks this question so as to know your strategy, as well as viewpoint to manage stress. Prepare in-depth and strategically for this interview question by referring to our exclusive post.
17. What Motivates You To Work?
There are always a few motivational factors that prompt an individual to work hard at their workplace and achieve all the goals in a time-bound manner. An interviewer is interested in knowing these factors as these usually help him in conducting detailed scrutiny of your personality, approach, and interests. Thus, be genuine and share an original response. In case you need some help and ten unique sample answers, please read our special post, which covers this interview question completely.
18. Which Is Your Favorite Animal?
This is a tricky and trending interview question, which is being asked in several interview sessions. This question might look plain and simple prima facie, but requires some extra knowledge and preparation, As an ideal response, you are required to choose a corporate-friendly animal, list out its positive qualities, and then align them with the requirements for this job. This is an important question and a perfect answer to this question can improve your selection chances considerably. Hence, always read and study from our exclusive post.
19. What Are Your Salary Expectations?
Never share any random figure as this can deplete your selection chances. For serious preparation, read our exclusive post.
20. Why You Want To Work With Us?
This question checks your level of commitment and seriousness towards the organization. For a better answer, read our special post.
21. Do You Have Any Questons For Us?
This question is usually asked for concluding an interview session and serves as the last question. Post this interview question, the interview opportunity for a candidate gets over, and now it is the time to wait for the results. Through this question an interviewer expects you to ask a few questions in regards to the organization, its work culture, work ethics, etc. Thus, always ask a few relevant questions, preferably based on the model questions mentioned below:
- What are the various allowances and incentives offered by the company to its employees?
- Please share the list of all the paid leaves and development programs offered by the company to its employees.
- Rejuvenation is a much-needed psychological break. Is it the policy of the company to offer all expenses paid leisure trips to its full-time employees?
Closing an interview session in style is as necessary and important as to a perfect beginning. Thus, always read our famous post, How To Close Your Interview Session In Style? for a better understanding and guidance of the same.