Risk Management interview preparation

Questions

100

Traced to a firm

37

Firms

12

Updated

September 2026

Asked at

All firmsUBS14MSCI7BLBlackRock5FTFranklin Templeton3Oaktree Capital Management2Scotiabank2Jane Street1Moody's1Neuberger Berman1PIMCO1SSState Street1TSTruist Securities1

Topic

All topicsMarket risk and VaR14Tail risk and stress testing5Greeks and sensitivities5Credit risk11Counterparty risk and CVA6Operational risk5Model risk and validation6Regulatory capital7Liquidity risk and ALM6Statistics and quant foundations7Indian regulation7Risk governance and appetite4Markets and macro9Fit and career8

Level

AnyCoreIntermediateHard

Type

AnyTechnicalCaseBrainteaserMarket viewFit

1. 046A trader has breached his VaR limit three times this month, and each time got approval after the fact. What do you do?Operational riskHardsuperdayOperational riskBank market risk

   Say this

   Three retrospective approvals isn't a limit breach problem, it's a control failure. The limit has effectively been replaced by a negotiation. I'd document the pattern, escalate it as a governance issue rather than three separate incidents, and force a decision: either the limit is wrong or the behaviour is.

   Then walk it

   1. First establish the facts precisely: what the limit is, the size and duration of each breach, who approved each one, whether the approver had authority, and whether the approvals were documented at the time or reconstructed afterwards. That last detail changes the nature of the issue completely.
   2. Then separate the two possible root causes. Either the limit is miscalibrated for a legitimate business, in which case the fix is a properly approved limit increase through the right committee. Or the trader is running more risk than the firm sanctioned, in which case it's a discipline matter.
   3. The crucial reframing: three ad hoc approvals in a month means the limit is no longer a control. A pre-approved excess is a limit; a post-approved excess is an apology. Say that sentence in the interview, because it's the point of the question.
   4. Escalation route: my head of risk and the market risk committee, not a quiet conversation with the desk head who has been signing the approvals. The approver is part of what needs reviewing, so escalating to them alone is the mistake.
   5. Then the pattern question. Look for other symptoms: end-of-day position reductions that reverse the next morning, P&L volatility inconsistent with reported risk, stale or hard-to-verify marks on illiquid positions. Limit breaches with cooperative approvals are a classic precursor, and every large rogue trading loss has this shape in hindsight.
   6. Consequences and record. In a bank this is reportable to the risk committee, it should appear in the operational risk event log, and it belongs in the trader's performance file. If nothing happens, the next breach is certain.
   7. And the systemic fix: hard-coded pre-trade blocks rather than post-trade reporting, a rule that excesses need pre-approval at a level above the desk, and an automatic escalation after a second breach in a rolling period.

   Where candidates lose it

   Treating it as three separate breaches to be logged. It's one control failure, and the interviewer is testing whether you'll escalate past the person who authorised it. The other failure is going straight to a disciplinary framing without checking whether the limit is simply miscalibrated for a legitimate business.

   Expect next

   • What if the approver is the head of the desk and outranks your boss?
   • What other red flags would you look for?
   • How would you redesign the limit framework so this can't happen?

Firm tags come from public, anonymous candidate reports on Wall Street Oasis: strong signal, not sworn testimony. Firms are named as the places a question was reported, not as partners of Fin Maverick. Answers are written for this page to show how to think out loud; they are not scripts to recite.