Financial Risk Management
Applying an understanding of standard risk assessment and mitigation techniques to identify, control, and minimize the impact of financial risks and business uncertainties.
Level 1. Demonstrates introductory understanding, directing people to the appropriate source for further information.
BEHAVIORS
- Explains the applicable financial risk management policies.
- Describes, in general terms, the impact of changes in risk factors (e.g., interest rates, foreign exchange, etc.) on an organization.
- Identifies basic risk mitigation strategies such as hedging.
QUESTIONS
- Describe your involvement with hedging transactions.
Probing Questions
* What was the circumstance?
* What was your involvement?
* What did you contribute to the final product? Was the hedging strategy effective?
- Tell me about your understanding of the relationship between financial risk and reward.
Probing Questions
* How have you balanced financial risk and reward in your work?
* How do you apply that to an environment of rising interest rates?
* Would you prefer a fixed or floating rate debt in such an environment?
Level 2. Applies the competency in common situations that present limited difficulties, working with a moderate level of guidance.
BEHAVIORS
- Communicates potential issues/risks within own unit/work area.
- Tracks hedge programs with applicable forecasts.
- Communicates, on a timely basis, obvious potential breakdowns of risk mitigation programs.
QUESTIONS
- Describe a time when you identified an obvious breakdown in a hedging or other risk management strategy.
Probing Questions
* How did you identify the breakdown?
* What analysis did you perform?
* How and to whom did you communicate your conclusions?
* What did the organization do as a result?
Level 3. Applies the competency in the full range of typical situations, requiring guidance in only the most complex or new situations.
BEHAVIORS
- Identifies financial risk-assessment models and strategies.
- Executes financial risk mitigation strategy, making process improvements.
- Produces reports or presentations that outline and explain financial risk management results.
QUESTIONS
- Describe a time when you implemented a new risk management strategy.
Probing Questions
* Where did the new strategy come from?
* How did you develop processes and procedures to implement the policy?
* What made the strategy effective?
* Was the implementation of policies was effective?
- Tell me about a time when you prepared a report setting out risk management gaps.
Probing Questions
* How did you identify the gaps?
* Did you make recommendations?
* How did you arrive at the recommendations?
* What was the result?
Level 4. Applies the competency in new or complex situations and advises others.
BEHAVIORS
- Plans financial risk management strategies, techniques, models and tools throughout the organization.
- Devises systems and processes to monitor the validity of financial risk modeling outputs.
- Conducts assessments of financial risk management strategies and processes.
QUESTIONS
- Describe a time when you devised a new or revised risk management system.
Probing Questions
* What was the impetus behind the new or revised system?
* What resources or input did you utilize in devising the process?
* How did you implement the new or revised process?
* Do you feel the new process was effective in minimizing or identifying risks?
- Tell me about a time when you led or were part of a team tasked with assessing financial risks for the organization.
Probing Questions
* What was your role on the team?
* What did you contribute to the assessment?
* How did you deal with conflicting priorities and viewpoints? Was the team effective in assessing cross-functional risks?
Level 5. Develops new approaches and methods in the area. Is recognized as an expert within the organization.
BEHAVIORS
- Sets financial risk management strategy across the organization.
- Coaches others on risk management concepts, techniques, models and tools.
- Develops policies and procedures around interest rates, commodities and foreign exchange across the organization globally.
QUESTIONS
- Tell me about an experience with setting policy on a financial risk area, such as interest rates or foreign currency.
Probing Questions
* What were your role and responsibilities?
* What was the environment at the time of the new policy?
* How did you balance maximizing stakeholder returns with minimizing risk?
* Was the strategy effective?
- Describe a time when you had to explain or defend the organization's risk management policy to internal or external audiences.
Probing Questions
* Who was your audience?
* What do you feel were their primary objections or concerns?
* How did you address those concerns?
* Did you adequately address the concerns or questions?