risk management case study questions and answers

Risk Management Interview Questions

The most important interview questions for Risk Managements, and how to answer them

Getting Started as a Risk Management

• What is a Risk Management
• How to Become
• Certifications
• Tools & Software
• LinkedIn Guide
• Interview Questions
• Work-Life Balance
• Professional Goals
• Resume Examples
• Cover Letter Examples

Interviewing as a Risk Management

Types of questions to expect in a risk management interview, technical knowledge and skills questions, behavioral questions, scenario-based and problem-solving questions, communication and interpersonal skills questions, regulatory and compliance questions, stay organized with interview tracking.

Preparing for a Risk Management Interview

How to prepare for a risk management interview.

• Understand the Company's Risk Profile: Research the company's industry, regulatory environment, and any specific risks it faces. This will enable you to discuss relevant risks and how you would manage them in context.
• Review Risk Management Frameworks and Tools: Be familiar with common risk management frameworks (like COSO, ISO 31000) and tools (such as risk registers, heat maps, and software solutions). Be prepared to discuss how you've used these in your past roles.
• Prepare for Behavioral Questions: Reflect on past experiences where you successfully identified and mitigated risks. Be ready to share examples that highlight your analytical thinking and problem-solving abilities.
• Brush Up on Quantitative Skills: Ensure your knowledge of statistical analysis, financial modeling, and other quantitative methods is sharp, as these skills are often crucial in risk management.
• Understand Current Trends and Challenges: Stay informed about emerging risks and trends in risk management, such as cyber risk, climate change, and geopolitical uncertainties.
• Develop Insightful Questions: Prepare questions that demonstrate your strategic thinking and interest in how the company approaches risk management. This could include inquiries about their risk appetite, reporting structures, or recent challenges they've faced.
• Practice Case Studies: If applicable, practice case studies or scenarios that may be presented in the interview to showcase your approach to evaluating and addressing complex risk issues.
• Mock Interviews: Conduct mock interviews with a mentor or professional in the field to gain feedback on your responses and to refine your communication skills.

Risk Management Interview Questions and Answers

"how do you identify and assess risks in a new project", how to answer it, example answer, "can you describe a time when you had to manage a significant risk that threatened project success", "how do you communicate risk to stakeholders", "what is your experience with risk management software and tools", "how do you ensure compliance with industry regulations and standards in your risk management practices", "how do you prioritize risks, and what factors influence your decision", "can you explain the difference between a risk and an issue, and how you handle each", "describe your process for creating a risk management plan for a new project.", which questions should you ask in a risk management interview, good questions to ask the interviewer, "how does the organization define and prioritize risk, and what risk management framework do you currently employ", "can you describe a recent significant risk the company faced and how the risk management team addressed it", "what are the short-term and long-term goals for the risk management team, and how is success measured", "how does the company foster a risk-aware culture, and what role does the risk management team play in this process", what does a good risk management candidate look like, strategic risk assessment, regulatory compliance, communication and influence, analytical and critical thinking, problem-solving and decision-making, adaptability and resilience, interview faqs for risk managements, what is the most common interview question for risk managements, what's the best way to discuss past failures or challenges in a risk management interview, how can i effectively showcase problem-solving skills in a risk management interview.

Risk Management Job Title Guide

Related Interview Guides

Navigating business uncertainties, safeguarding assets through strategic risk mitigation

Ensuring financial accuracy and compliance, safeguarding business integrity and growth

Driving financial strategies, analyzing market trends for business profitability

Balancing risk and reward, ensuring financial stability through strategic analysis

Driving financial strategy and growth, ensuring fiscal health and sustainability

Steering financial success with strategic oversight, ensuring fiscal integrity and growth

Start Your Risk Management Career with Teal

• Predict! Software Suite
• Training and Coaching
• Predict! Risk Controller
• Rapid Deployment
• Predict! Risk Analyser
• Predict! Risk Reporter
• Predict! Risk Visualiser
• Predict! Cloud Hosting
• BOOK A DEMO
• Risk Vision
• Win Proposals with Risk Analysis
• Case Studies
• Video Gallery
• White Papers
• Upcoming Events
• Past Events

Fehmarnbelt case study

. . . . . learn more

Lend Lease case study

ASC case study

Tornado IPT case study

LLW Repository case study

OHL case study

Babcock case study

HUMS case study

UK Chinook case study

• EMEA: +44 (0) 1865 987 466
• Americas: +1 (0) 437 269 0697
• APAC: +61 499 520 456

Subscribe for Updates

Copyright © 2024 risk decisions. All rights reserved.

• Privacy Policy
• Cookie Policy
• Terms and Conditions
• Company Registration No: 01878114

Powered by The Communications Group

Table of Contents

Understanding project risk management, definition and explanation of project risk management, 4 key components of project risk management, risk identification, risk assessment, risk response planning, risk monitoring and control, 5 project risk management case studies, gordie howe international bridge project, fujitsu’s early-career project managers, vodafone’s complex technology project, fehmarnbelt project, lend lease project, project risk management at designveloper, how we manage project risks, advancements in project risk management, project risk management: 5 case studies you should not miss.

May 21, 2024

Exploring project risk management, one can see how vital it is in today’s business world. This article from Designveloper, “Project Risk Management: 5 Case Studies You Should Not Miss”, exists in order to shed light on this important component of project management.

We’ll reference some new numbers and facts that highlight the significance of risk management in projects. These data points are based on legit reports and will help create a good basis of understanding on the subject matter.

In addition, we will discuss specific case studies when risk management was successfully applied and when it was not applied in project management. These real world examples are very much important for project managers and teams.

It is also important to keep in mind that each project has associated risks. However through project risk management these risks can be identified, analyzed, prioritized and managed in order to make the project achieve its objectives. Well then, let’s take this journey of understanding together. Watch out for an analysis of the five case studies you must not miss.

Risk management is a very critical component of any project. Risk management is a set of tools that allow determining the potential threats to the success of a project and how to address them. Let’s look at some more recent stats and examples to understand this better.

Statistics show that as high as 70% of all projects are unsuccessful . This high failure rate highlights the need for efficient project risk management. Surprisingly, organizations that do not attach much importance to project risk management face 50% chances of their project failure. This results in huge losses of money and untapped business potential.

Additionally, poor performance leads to approximated 10% loss of every dollar spent on projects. This translates to a loss of $99 for every $1 billion invested. These statistics demonstrate the importance of project risk management in improving project success rates and minimizing waste.

Let us consider a project management example to demonstrate the relevance of the issue discussed above. Consider a new refinery being constructed in the Middle East. The project is entering a key phase: purchasing. Poor risk management could see important decisions surrounding procurement strategy, or the timing of the tendering process result in project failure.

Project risk management in itself is a process that entails the identification of potential threats and their mitigation. It is not reactionary but proactive.

This process begins with the identification of potential risks. These could be any time from budget overruns to delayed deliveries. After the risks are identified they are then analyzed. This involves estimating the probability of each risk event and the potential consequences to the project.

The next stage is risk response planning. This could be in the form of risk reduction, risk shifting or risk acceptance. The goal here is to reduce the impact of risks on the project.

Finally, the process entails identifying and tracking these risks throughout the life of a project. This helps in keeping the project on course and any new risks that might arise are identified and managed.

Let’s dive into the heart of project risk management: its four key components. These pillars form the foundation of any successful risk management strategy. They are risk identification, risk analysis, risk response planning, and risk monitoring and control. Each plays a crucial role in ensuring project success. This section will provide a detailed explanation of each component, backed by data and real-world examples. So, let’s embark on this journey to understand the four key components of project risk management.

Risk identification is the first process in a project risk management process. It’s about proactively identifying risks that might cause a project to fail. This is very important because a recent study has shown that 77% of companies had operational surprises due to unidentified risks.

There are different approaches to risk identification such as brainstorming, Delphi technique, SWOT analysis, checklist analysis, flowchart. These techniques assist project teams in identifying all potential risks.

Risk identification is the second stage of the project risk management process. It is a systematic approach that tries to determine the probability of occurrence and severity of identified risks. This step is very important; it helps to rank the identified risks and assists in the formation of risk response strategies.

Risk assessment involves two key elements: frequency and severity of occurrence. As for risk probability, it estimates the chances of a risk event taking place, and risk impact measures the impact associated with the risk event.

This is the third component of project risk management. It deals with planning the best ways to deal with the risks that have been identified. This step is important since it ensures that the risk does not have a substantial effect on the project.

One of the statistics stated that nearly three-quarters of organizations have an incident response plan and 63 percent of these organizations conduct the plan regularly. This explains why focusing only on risks’ identification and analysis without a plan of action is inadequate.

Risk response planning involves four key strategies: risk acceptance, risk sharing, risk reduction, and risk elimination. Each strategy is selected depending on the nature and potential of the risk.

Risk monitoring and control is the last step of project risk management. It’s about monitoring and controlling the identified risks and making sure that they are being addressed according to the plan.

Furthermore, risk control and management involve managing identified risks, monitoring the remaining risk, identifying new risks, implementing risk strategies, and evaluating their implementation during the project life cycle.

It is now high time to approach the practical side of project risk management. This section provides selected five case studies that explain the need and application of project risk management. Each case study gives an individual approach revealing how risk management can facilitate success of the project. Additionally, these case studies include construction projects, technology groups, among other industries. They show how effective project risk management can be, by allowing organizations to respond to uncertainties and successfully accomplish their project objectives. Let us now examine these case studies and understand the concept of risk in project management.

The Gordie Howe International Bridge is one of the projects that demonstrate the principles of project risk management. This is one of the biggest infrastructure projects in North America which includes the construction of a 6 lane bridge at the busiest commercial border crossing point between the U.S. and Canada.

The project scope can be summarized as: New Port of Entry and Inspection facilities for the Canadian and US governments; Tolls Collection Facilities; Projects and modifications to multiple local bridges and roadways. The project is administered via Windsor-Detroit Bridge Authority, a nonprofit Canadian Crown entity.

Specifically, one of the project challenges associated with the fact that the project was a big one in terms of land size and the community of interests involved in the undertaking. Governance and the CI were fundamental aspects that helped the project team to overcome these challenges.

The PMBOK® Guide is the contractual basis for project management of the project agreement. This dedication to following the best practices for project management does not end with bridge construction: It spreads to all other requirements.

However, the project is making steady progress to the objective of finishing the project in 2024. This case study clearly demonstrates the role of project risk management in achieving success with large and complicated infrastructure projects.

Fujitsu is an international company that deals with the provision of a total information and communication technology system as well as its products and services. The typical way was to employ a few college and school leavers and engage them in a two-year manual management training and development course. Nevertheless, this approach failed in terms of the following.

Firstly, the training was not comprehensive in its coverage of project management and was solely concerned with generic messaging – for example, promoting leadership skills and time management. Secondly it was not effectively reaching out to the need of apprentices. Thirdly the two year time frame was not sufficient to allow for a deep approach to the development of the required project management skills for this job. Finally the retention problems of employees in the train program presented a number of issues.

To tackle these issues, Fujitsu UK adopted a framework based on three dimensions: structured learning, learning from others, and rotation. This framework is designed to operate for the first five years of a participant’s career and is underpinned by the 70-20-10 model for learning and development. Rogers’ model acknowledges that most learning occurs on the job.

The initial training process starts with a three-week formal learning and induction program that includes the initial orientation to the organization and its operations, the fundamentals of project management, and business in general. Lastly, the participants are put on a rotational assignment in the PMO of the program for the first six to eight months.

Vodafone is a multinational mobile telecommunications group that manages telecommunications services in 28 countries across five continents and decided to undertake a highly complex technology project to replace an existing network with a fully managed GLAN in 42 locations. This project was much complex and thus a well grounded approach to risk management was needed.

The project team faced a long period of delay in signing the contract and frequent changes after the contract was signed until the project is baselined. These challenges stretched the time frame of the project and enhanced the project complexity.

In order to mitigate the risks, Vodafone employed PMI standards for their project management structure. This approach included conducting workshops, developing resource and risk management plan and tailoring project documentations as well as conducting regular lesson learned.

Like any other project, the Vodafone GLAN project was not an easy one either but it was completed on time and in some cases ahead of the schedule that the team had anticipated to complete the project. At the first stage 90% of migrated sites were successfully migrated at the first attempt and 100% – at second.

The Fehmarnbelt project is a real-life example of the strategic role of project risk management. It provides information about a mega-project to construct the world’s longest immersed tunnel between Germany and Denmark. It will be a four-lane highway and two-rail electrified tunnel extending for 18 kilometers and it will be buried 40 meters under the Baltic Sea.

This project is managed by Femern A/S which is a Danish government-owned company with construction value over more than €7 billion (£8. 2 billion). It is estimated to provide jobs for 3,000 workers directly in addition to 10,000 in the suppliers. Upon its completion, its travel between Denmark and Germany will be cut to 10 minutes by automobile and 7 minutes by rail.

The Femern risk management functions and controls in particular the role of Risk Manager Bo Nygaard Sørensen then initiated the process and developed some clear key strategic objectives for the project. They formulated a simple, dynamic, and comprehensive risk register to give a more complete risk view of the mega-project. They also created a risk index in order to assess all risks in a consistent and predictable manner, classify them according to their importance, and manage and overcome the risks in an appropriate and timely manner.

Predict! is a risk assessment and analysis tool that came in use by the team, which helps determine the effect of various risks on the cost of the construction of the link and to calculate the risk contingency needed for the project. This way they were able to make decisions on whether an immersed tunnel could be constructed instead of a bridge.

Lend Lease is an international property and infrastructure group that operates in over 20 countries in the world; the company offers a better example of managing project risks. The company has established a complex framework called the Global Minimum Requirements (GMRs) to identify risks to which it is exposed.

The GMRs have scope for the phase of the project before a decision to bid for a job is taken. This framework includes factors related to flooding, heat, biodiversity, land or soil subsidence, water, weathering, infrastructure and insurance.

The GMRs are organized into five main phases in line with the five main development stages of a project. These stages guarantee that vital decisions are made at the ideal time. The stages include governance, investment, design and procurement, establishment, and delivery.

For instance, during the design and procurement stage, the GMRs identify requisite design controls that will prevent environment degradation during design as well as fatal risk elimination during planning and procurement. This approach aids in effective management of risks and delivery of successful projects in Lend Lease.

Let’s take a closer look at what risk management strategies are used here at Designveloper – a top web & software development firm in Vietnam. We also provide a range of other services, so it is essential that we manage risks on all our projects in similar and effective ways. The following part of the paper will try to give a glimpse of how we manage project risk in an exemplary manner using research from recent years and include specific cases.

The following steps explain the risk management process that we use—from the identification of potential risks to managing them: Discovering the risks. We will also mention here how our experience and expertise has helped us in this area.

Risk management as a function in project delivery is well comprehended at Designveloper. Our method of managing the project risk is proactive and systematic, which enables us to predict possible problems and create successful solutions to overcome them.

One of the problems we frequently encounter is the comprehension of our clients’ needs. In most cases, clients come to us with a basic idea or concept. To convert these ideas into particular requirements and feature lists, the business analysts of our company have to collaborate with the client. The whole process is often a time-waster, and having a chance is missed.

To solve this problem, we’ve created a library of features with their own time and cost estimate. This library is based on data of previous projects that we have documented, arranged, and consolidated. At the present time when a client approaches us with a request, we can search for similar features in our library and give an initial quote. This method has considerably cut the period of providing the first estimations to our clients and saving the time for all participants.

This is only one of the techniques we use to mitigate project risks at Designveloper. The focus on effective project risk management has been contributing significantly to our successful operation as a leading company in web and software development in Vietnam. It is a mindset that enables us to convert challenges into opportunities and provide outstanding results for our clients.

In Designveloper, we always aim at enhancing our project risk management actions. Below are a couple examples of the advancements we’ve made.

To reduce the waiting time, we have adopted continuous deployment. This enables us to provide value fast and effectively. We release a minimum feature rather than a big feature. It helps us to collect the input from our customers and keep on improving. What this translates into for our customers is that they start to derive value from the product quickly and that they have near-continuous improvement rather than have to wait for a “perfect” feature.

We also hold regular “sync-up” meetings between teams to keep the information synchronized and transparent from input (requirements) to output (product). Changes are known to all teams and thus teams can prepare to respond in a flexible and best manner.

Some of these developments in project risk management have enabled us to complete projects successfully, and be of an excellent service to our clients. They show our support of the never-ending improving and our capability to turn threats into opportunities. The strength of Designveloper is largely attributed to the fact that we do not just control project risks – we master them.

To conclude, project risk management is an important element of nearly all successful projects. It is all about identification of possible problems and organization necessary measures that will result in the success of the project. The case studies addressed in this article illustrate the significance and implementation of project risk management in different settings and fields. They show what efficient risk management can result in.

We have witnessed the advantages of solid project risk management at Designveloper. The combination of our approach, powered by our track record and professionalism, has enabled us to complete projects that met all client’s requirements. We are not only managing project risks but rather mastering them.

We trust you have found this article helpful in understanding project risk management and its significance in the fast-changing, complicated project environment of today. However, one needs to mind that proper project management is not only about task and resource management but also risk management. And at Designveloper, our team is there to guide you through those risks and to help you realize your project’s objectives.

Also published on

Share post on

Insights worth keeping. Get them weekly.

Get in touch

Simply register below to receive our weekly newsletters with the newest blog posts

Read more topics

The marketplace for case solutions.

Enterprise Risk Management at Hydro One (A) – Case Solution

Energy giant Hydro One is looking into the possibility of new threats and opportunities which is common in its line of business which faces issues on climate change and carbon legislation, and many more. Hydro One's CEO, Laura Formusa, is faced with the question of whether the company's strategy was tenable considering that it seems like Hydro One's risk profile had shifted.

​Anette Mikes Harvard Business Review ( 109001-PDF-ENG ) July 03, 2008

Case questions answered:

Case study questions answered in the first solution:

• Why did Hydro One decide to implement ERM, and what approach did they follow?
• How did Hydro One benefit from using Enterprise Risk Management?
• What is the effect of using ERM on the company’s business strategy and continuity?
• How would you describe Hydro One’s strategy? What type of risks and uncertainties does Hydro One face?
• Consider the three stages of Hydro One’s enterprise risk management (ERM) process: What are the strengths and weaknesses of this process?
• What recommendations would you make to CEO Laura Formusa about the process?

Not the questions you were looking for? Submit your own questions & get answers .

Enterprise Risk Management at Hydro One (A) Case Answers

You will receive access to two case study solutions! The second is not yet visible in the preview.

Evaluation of Enterprise Risk Management at Hydro One

Hydro One Inc. is considered the most prominent electricity distribution organization in Ontario, Canada, and is among the biggest organizations in North America. The company and its affiliates implemented the use of a business-extensive portfolio program for the management of significant business risks in the organization.

The Enterprise Risk Management approach implemented by Hydro Ones supports the needs of business management and the due attentive roles of senior management. At the same time, they aimed to strengthen their management approaches in a way clear to the key external stakeholders.

The company’s workers functioned in dangerous situations and were always affected by the vagaries of the extreme weather existing in North America. The company predicted the possible occurrence of new threats and opportunities in the industry that is faced with carbon legislation and climate change, increased adoption of emergent technologies, and the deregulation of the electricity markets.

The CEO of Hydro One, Laura Formusa, felt that the risk profile of the company had shifted (Aabo, Fraser & Simkins, 2015). Therefore, she decided to lead the formation of the enterprise risk management approach.

The company presented a three-phase enterprise risk management plan. In the first phase, the employees were given an opportunity in various workshops to acquire a collective understanding of the key strategic goals of the company and the risks that may derail the achievement of the objectives.

The second phase of the ERM program is conducted during the yearly planning process. Resources were allocated to investment project proposals of priority with regard to the identified risks. In the third phase, the principal risk officer performed a chain of interviews twice a year with leading management officials to assess the firm’s corporate risk report.

Based on the ERM approach created, it is noted that the company treats risk management as a collective obligation from the Board of Directors to the respective workers. Everyone is expected to have a clear understanding of the risk that falls within the confines of their responsibilities and is required to manage such risks within the allowed risk acceptance.

The company tends to manage the substantial risks through a portfolio program, which enhances the trade-offs amid risks and returns in all the business operations (Fraser & Simkins, 2016). The optimization process ensures that the company consents to relative risk levels to help achieve the objectives of the business.

Hydro One’s Enterprise Risk Management approach would be very effective because it expects every division or line of business to perform a risk assessment every year for the whole business and locally determined for elements that are below the subsidiary level.

The company’s ERM is integrated into many of the critical business processes like business planning, strategic planning, investment decisions, and operational management to ensure that there are consistent risk considerations in all processes of decision-making.

It can also be noted that Hydro One’s enterprise risk management is a well-organized, continuous, and comprehensive process where risks are recognized, assessed, and intentionally accepted or lessened within the accepted levels of risk tolerance (Fraser & Simkins, 2016).

From a financial perspective, ERM has benefited Hydro One through the positive change in credit ratings and the resultant decrease in the debts of the company.

Additionally, the ERM program led to the improvement of the company’s capital expenditure process through the use of the mitigation prioritization index. It should be noted that the benefit considers the positive impacts of risk reduction in all risk categories by proper allocation of capital expenditures in accordance with the highest overall risk decrease for every amount the company spends.

On top of the lower cost of capital and improved capital allocation, there have been…

Unlock Case Solution Now!

Get instant access to this case solution with a simple, one-time payment ($24.90).

After purchase:

• You'll be redirected to the full case solution.
• You will receive an access link to the solution via email.

Best decision to get my homework done faster! Michael MBA student, Boston

How do I get access?

Upon purchase, you are forwarded to the full solution and also receive access via email.

Is it safe to pay?

Yes! We use Paypal and Stripe as our secure payment providers of choice.

What is Casehero?

We are the marketplace for case solutions - created by students, for students.

Enterprise Risk Management Case Studies: Heroes and Zeros

By Andy Marker | April 7, 2021

• Share on Facebook
• Share on LinkedIn

Link copied

We’ve compiled more than 20 case studies of enterprise risk management programs that illustrate how companies can prevent significant losses yet take risks with more confidence.   

Included on this page, you’ll find case studies and examples by industry , case studies of major risk scenarios (and company responses), and examples of ERM successes and failures .

Enterprise Risk Management Examples and Case Studies

With enterprise risk management (ERM) , companies assess potential risks that could derail strategic objectives and implement measures to minimize or avoid those risks. You can analyze examples (or case studies) of enterprise risk management to better understand the concept and how to properly execute it.

The collection of examples and case studies on this page illustrates common risk management scenarios by industry, principle, and degree of success. For a basic overview of enterprise risk management, including major types of risks, how to develop policies, and how to identify key risk indicators (KRIs), read “ Enterprise Risk Management 101: Programs, Frameworks, and Advice from Experts .”

Enterprise Risk Management Framework Examples

An enterprise risk management framework is a system by which you assess and mitigate potential risks. The framework varies by industry, but most include roles and responsibilities, a methodology for risk identification, a risk appetite statement, risk prioritization, mitigation strategies, and monitoring and reporting.

To learn more about enterprise risk management and find examples of different frameworks, read our “ Ultimate Guide to Enterprise Risk Management .”

Enterprise Risk Management Examples and Case Studies by Industry

Though every firm faces unique risks, those in the same industry often share similar risks. By understanding industry-wide common risks, you can create and implement response plans that offer your firm a competitive advantage.

Enterprise Risk Management Example in Banking

Toronto-headquartered TD Bank organizes its risk management around two pillars: a risk management framework and risk appetite statement. The enterprise risk framework defines the risks the bank faces and lays out risk management practices to identify, assess, and control risk. The risk appetite statement outlines the bank’s willingness to take on risk to achieve its growth objectives. Both pillars are overseen by the risk committee of the company’s board of directors.  

Risk management frameworks were an important part of the International Organization for Standardization’s 31000 standard when it was first written in 2009 and have been updated since then. The standards provide universal guidelines for risk management programs.  

Risk management frameworks also resulted from the efforts of the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The group was formed to fight corporate fraud and included risk management as a dimension. 

Once TD completes the ERM framework, the bank moves onto the risk appetite statement. 

The bank, which built a large U.S. presence through major acquisitions, determined that it will only take on risks that meet the following three criteria:

• The risk fits the company’s strategy, and TD can understand and manage those risks. 
• The risk does not render the bank vulnerable to significant loss from a single risk.
• The risk does not expose the company to potential harm to its brand and reputation. 

Some of the major risks the bank faces include strategic risk, credit risk, market risk, liquidity risk, operational risk, insurance risk, capital adequacy risk, regulator risk, and reputation risk. Managers detail these categories in a risk inventory. 

The risk framework and appetite statement, which are tracked on a dashboard against metrics such as capital adequacy and credit risk, are reviewed annually. 

TD uses a three lines of defense (3LOD) strategy, an approach widely favored by ERM experts, to guard against risk. The three lines are as follows:

• A business unit and corporate policies that create controls, as well as manage and monitor risk
• Standards and governance that provide oversight and review of risks and compliance with the risk appetite and framework 
• Internal audits that provide independent checks and verification that risk-management procedures are effective

Enterprise Risk Management Example in Pharmaceuticals

Drug companies’ risks include threats around product quality and safety, regulatory action, and consumer trust. To avoid these risks, ERM experts emphasize the importance of making sure that strategic goals do not conflict. 

For Britain’s GlaxoSmithKline, such a conflict led to a breakdown in risk management, among other issues. In the early 2000s, the company was striving to increase sales and profitability while also ensuring safe and effective medicines. One risk the company faced was a failure to meet current good manufacturing practices (CGMP) at its plant in Cidra, Puerto Rico. 

CGMP includes implementing oversight and controls of manufacturing, as well as managing the risk and confirming the safety of raw materials and finished drug products. Noncompliance with CGMP can result in escalating consequences, ranging from warnings to recalls to criminal prosecution. 

GSK’s unit pleaded guilty and paid $750 million in 2010 to resolve U.S. charges related to drugs made at the Cidra plant, which the company later closed. A fired GSK quality manager alerted regulators and filed a whistleblower lawsuit in 2004. In announcing the consent decree, the U.S. Department of Justice said the plant had a history of bacterial contamination and multiple drugs created there in the early 2000s violated safety standards.

According to the whistleblower, GSK’s ERM process failed in several respects to act on signs of non-compliance with CGMP. The company received warning letters from the U.S. Food and Drug Administration in 2001 about the plant’s practices, but did not resolve the issues. 

Additionally, the company didn’t act on the quality manager’s compliance report, which advised GSK to close the plant for two weeks to fix the problems and notify the FDA. According to court filings, plant staff merely skimmed rejected products and sold them on the black market. They also scraped by hand the inside of an antibiotic tank to get more product and, in so doing, introduced bacteria into the product.

Enterprise Risk Management Example in Consumer Packaged Goods

Mars Inc., an international candy and food company, developed an ERM process. The company piloted and deployed the initiative through workshops with geographic, product, and functional teams from 2003 to 2012. 

Driven by a desire to frame risk as an opportunity and to work within the company’s decentralized structure, Mars created a process that asked participants to identify potential risks and vote on which had the highest probability. The teams listed risk mitigation steps, then ranked and color-coded them according to probability of success. 

Larry Warner, a Mars risk officer at the time, illustrated this process in a case study . An initiative to increase direct-to-consumer shipments by 12 percent was colored green, indicating a 75 percent or greater probability of achievement. The initiative to bring a new plant online by the end of Q3 was coded red, meaning less than a 50 percent probability of success. 

The company’s results were hurt by a surprise at an operating unit that resulted from a so-coded red risk identified in a unit workshop. Executives had agreed that some red risk profile was to be expected, but they decided that when a unit encountered a red issue, it must be communicated upward when first identified. This became a rule. 

This process led to the creation of an ERM dashboard that listed initiatives in priority order, with the profile of each risk faced in the quarter, the risk profile trend, and a comment column for a year-end view. 

According to Warner, the key factors of success for ERM at Mars are as follows:

• The initiative focused on achieving operational and strategic objectives rather than compliance, which refers to adhering to established rules and regulations.
• The program evolved, often based on requests from business units, and incorporated continuous improvement. 
• The ERM team did not overpromise. It set realistic objectives.
• The ERM team periodically surveyed business units, management teams, and board advisers.

Enterprise Risk Management Example in Retail

Walmart is the world’s biggest retailer. As such, the company understands that its risk makeup is complex, given the geographic spread of its operations and its large number of stores, vast supply chain, and high profile as an employer and buyer of goods. 

In the 1990s, the company sought a simplified strategy for assessing risk and created an enterprise risk management plan with five steps founded on these four questions:

• What are the risks?
• What are we going to do about them?
• How will we know if we are raising or decreasing risk?
• How will we show shareholder value?

The process follows these five steps:

• Risk Identification: Senior Walmart leaders meet in workshops to identify risks, which are then plotted on a graph of probability vs. impact. Doing so helps to prioritize the biggest risks. The executives then look at seven risk categories (both internal and external): legal/regulatory, political, business environment, strategic, operational, financial, and integrity. Many ERM pros use risk registers to evaluate and determine the priority of risks. You can download templates that help correlate risk probability and potential impact in “ Free Risk Register Templates .”
• Risk Mitigation: Teams that include operational staff in the relevant area meet. They use existing inventory procedures to address the risks and determine if the procedures are effective.
• Action Planning: A project team identifies and implements next steps over the several months to follow.
• Performance Metrics: The group develops metrics to measure the impact of the changes. They also look at trends of actual performance compared to goal over time.
• Return on Investment and Shareholder Value: In this step, the group assesses the changes’ impact on sales and expenses to determine if the moves improved shareholder value and ROI.

To develop your own risk management planning, you can download a customizable template in “ Risk Management Plan Templates .”

Enterprise Risk Management Example in Agriculture

United Grain Growers (UGG), a Canadian grain distributor that now is part of Glencore Ltd., was hailed as an ERM innovator and became the subject of business school case studies for its enterprise risk management program. This initiative addressed the risks associated with weather for its business. Crop volume drove UGG’s revenue and profits. 

In the late 1990s, UGG identified its major unaddressed risks. Using almost a century of data, risk analysts found that extreme weather events occurred 10 times as frequently as previously believed. The company worked with its insurance broker and the Swiss Re Group on a solution that added grain-volume risk (resulting from weather fluctuations) to its other insured risks, such as property and liability, in an integrated program. 

The result was insurance that protected grain-handling earnings, which comprised half of UGG’s gross profits. The greater financial stability significantly enhanced the firm’s ability to achieve its strategic objectives. 

Since then, the number and types of instruments to manage weather-related risks has multiplied rapidly. For example, over-the-counter derivatives, such as futures and options, began trading in 1997. The Chicago Mercantile Exchange now offers weather futures contracts on 12 U.S. and international cities. 

Weather derivatives are linked to climate factors such as rainfall or temperature, and they hedge different kinds of risks than do insurance. These risks are much more common (e.g., a cooler-than-normal summer) than the earthquakes and floods that insurance typically covers. And the holders of derivatives do not have to incur any damage to collect on them.

These weather-linked instruments have found a wider audience than anticipated, including retailers that worry about freak storms decimating Christmas sales, amusement park operators fearing rainy summers will keep crowds away, and energy companies needing to hedge demand for heating and cooling.

This area of ERM continues to evolve because weather and crop insurance are not enough to address all the risks that agriculture faces. Arbol, Inc. estimates that more than $1 trillion of agricultural risk is uninsured. As such, it is launching a blockchain-based platform that offers contracts (customized by location and risk parameters) with payouts based on weather data. These contracts can cover risks associated with niche crops and small growing areas.

Enterprise Risk Management Example in Insurance

Switzerland’s Zurich Insurance Group understands that risk is inherent for insurers and seeks to practice disciplined risk-taking, within a predetermined risk tolerance. 

The global insurer’s enterprise risk management framework aims to protect capital, liquidity, earnings, and reputation. Governance serves as the basis for risk management, and the framework lays out responsibilities for taking, managing, monitoring, and reporting risks. 

The company uses a proprietary process called Total Risk Profiling (TRP) to monitor internal and external risks to its strategy and financial plan. TRP assesses risk on the basis of severity and probability, and helps define and implement mitigating moves. 

Zurich’s risk appetite sets parameters for its tolerance within the goal of maintaining enough capital to achieve an AA rating from rating agencies. For this, the company uses its own Zurich economic capital model, referred to as Z-ECM. The model quantifies risk tolerance with a metric that assesses risk profile vs. risk tolerance. 

To maintain the AA rating, the company aims to hold capital between 100 and 120 percent of capital at risk. Above 140 percent is considered overcapitalized (therefore at risk of throttling growth), and under 90 percent is below risk tolerance (meaning the risk is too high). On either side of 100 to 120 percent (90 to 100 percent and 120 to 140 percent), the insurer considers taking mitigating action. 

Zurich’s assessment of risk and the nature of those risks play a major role in determining how much capital regulators require the business to hold. A popular tool to assess risk is the risk matrix, and you can find a variety of templates in “ Free, Customizable Risk Matrix Templates .”

In 2020, Zurich found that its biggest exposures were market risk, such as falling asset valuations and interest-rate risk; insurance risk, such as big payouts for covered customer losses, which it hedges through diversification and reinsurance; credit risk in assets it holds and receivables; and operational risks, such as internal process failures and external fraud.

Enterprise Risk Management Example in Technology

Financial software maker Intuit has strengthened its enterprise risk management through evolution, according to a case study by former Chief Risk Officer Janet Nasburg. 

The program is founded on the following five core principles:

• Use a common risk framework across the enterprise.
• Assess risks on an ongoing basis.
• Focus on the most important risks.
• Clearly define accountability for risk management.
• Commit to continuous improvement of performance measurement and monitoring. 

ERM programs grow according to a maturity model, and as capability rises, the shareholder value from risk management becomes more visible and important. 

The maturity phases include the following:

• Ad hoc risk management addresses a specific problem when it arises.
• Targeted or initial risk management approaches risks with multiple understandings of what constitutes risk and management occurs in silos. 
• Integrated or repeatable risk management puts in place an organization-wide framework for risk assessment and response. 
• Intelligent or managed risk management coordinates risk management across the business, using common tools. 
• Risk leadership incorporates risk management into strategic decision-making. 

Intuit emphasizes using key risk indicators (KRIs) to understand risks, along with key performance indicators (KPIs) to gauge the effectiveness of risk management. 

Early in its ERM journey, Intuit measured performance on risk management process participation and risk assessment impact. For participation, the targeted rate was 80 percent of executive management and business-line leaders. This helped benchmark risk awareness and current risk management, at a time when ERM at the company was not mature.

Conduct an annual risk assessment at corporate and business-line levels to plot risks, so the most likely and most impactful risks are graphed in the upper-right quadrant. Doing so focuses attention on these risks and helps business leaders understand the risk’s impact on performance toward strategic objectives. 

In the company’s second phase of ERM, Intuit turned its attention to building risk management capacity and sought to ensure that risk management activities addressed the most important risks. The company evaluated performance using color-coded status symbols (red, yellow, green) to indicate risk trend and progress on risk mitigation measures.

In its third phase, Intuit moved to actively monitoring the most important risks and ensuring that leaders modified their strategies to manage risks and take advantage of opportunities. An executive dashboard uses KRIs, KPIs, an overall risk rating, and red-yellow-green coding. The board of directors regularly reviews this dashboard.

Over this evolution, the company has moved from narrow, tactical risk management to holistic, strategic, and long-term ERM.

Enterprise Risk Management Case Studies by Principle

ERM veterans agree that in addition to KPIs and KRIs, other principles are equally important to follow. Below, you’ll find examples of enterprise risk management programs by principles.

ERM Principle #1: Make Sure Your Program Aligns with Your Values

Raytheon Case Study U.S. defense contractor Raytheon states that its highest priority is delivering on its commitment to provide ethical business practices and abide by anti-corruption laws.

Raytheon backs up this statement through its ERM program. Among other measures, the company performs an annual risk assessment for each function, including the anti-corruption group under the Chief Ethics and Compliance Officer. In addition, Raytheon asks 70 of its sites to perform an anti-corruption self-assessment each year to identify gaps and risks. From there, a compliance team tracks improvement actions. 

Every quarter, the company surveys 600 staff members who may face higher anti-corruption risks, such as the potential for bribes. The survey asks them to report any potential issues in the past quarter.

Also on a quarterly basis, the finance and internal controls teams review higher-risk profile payments, such as donations and gratuities to confirm accuracy and compliance. Oversight and compliance teams add other checks, and they update a risk-based audit plan continuously.

ERM Principle #2: Embrace Diversity to Reduce Risk

State Street Global Advisors Case Study In 2016, the asset management firm State Street Global Advisors introduced measures to increase gender diversity in its leadership as a way of reducing portfolio risk, among other goals. 

The company relied on research that showed that companies with more women senior managers had a better return on equity, reduced volatility, and fewer governance problems such as corruption and fraud. 

Among the initiatives was a campaign to influence companies where State Street had invested, in order to increase female membership on their boards. State Street also developed an investment product that tracks the performance of companies with the highest level of senior female leadership relative to peers in their sector. 

In 2020, the company announced some of the results of its effort. Among the 1,384 companies targeted by the firm, 681 added at least one female director.

ERM Principle #3: Do Not Overlook Resource Risks

Infosys Case Study India-based technology consulting company Infosys, which employees more than 240,000 people, has long recognized the risk of water shortages to its operations. 

India’s rapidly growing population and development has increased the risk of water scarcity. A 2020 report by the World Wide Fund for Nature said 30 cities in India faced the risk of severe water scarcity over the next three decades. 

Infosys has dozens of facilities in India and considers water to be a significant short-term risk. At its campuses, the company uses the water for cooking, drinking, cleaning, restrooms, landscaping, and cooling. Water shortages could halt Infosys operations and prevent it from completing customer projects and reaching its performance objectives. 

In an enterprise risk assessment example, Infosys’ ERM team conducts corporate water-risk assessments while sustainability teams produce detailed water-risk assessments for individual locations, according to a report by the World Business Council for Sustainable Development .

The company uses the COSO ERM framework to respond to the risks and decide whether to accept, avoid, reduce, or share these risks. The company uses root-cause analysis (which focuses on identifying underlying causes rather than symptoms) and the site assessments to plan steps to reduce risks. 

Infosys has implemented various water conservation measures, such as water-efficient fixtures and water recycling, rainwater collection and use, recharging aquifers, underground reservoirs to hold five days of water supply at locations, and smart-meter usage monitoring. Infosys’ ERM team tracks metrics for per-capita water consumption, along with rainfall data, availability and cost of water by tanker trucks, and water usage from external suppliers. 

In the 2020 fiscal year, the company reported a nearly 64 percent drop in per-capita water consumption by its workforce from the 2008 fiscal year. 

The business advantages of this risk management include an ability to open locations where water shortages may preclude competitors, and being able to maintain operations during water scarcity, protecting profitability.

ERM Principle #4: Fight Silos for Stronger Enterprise Risk Management

U.S. Government Case Study The terrorist attacks of September 11, 2001, revealed that the U.S. government’s then-current approach to managing intelligence was not adequate to address the threats — and, by extension, so was the government’s risk management procedure. Since the Cold War, sensitive information had been managed on a “need to know” basis that resulted in data silos. 

In the case of 9/11, this meant that different parts of the government knew some relevant intelligence that could have helped prevent the attacks. But no one had the opportunity to put the information together and see the whole picture. A congressional commission determined there were 10 lost operational opportunities to derail the plot. Silos existed between law enforcement and intelligence, as well as between and within agencies. 

After the attacks, the government moved toward greater information sharing and collaboration. Based on a task force’s recommendations, data moved from a centralized network to a distributed model, and social networking tools now allow colleagues throughout the government to connect. Staff began working across agency lines more often.

Enterprise Risk Management Examples by Scenario

While some scenarios are too unlikely to receive high-priority status, low-probability risks are still worth running through the ERM process. Robust risk management creates a culture and response capacity that better positions a company to deal with a crisis.

In the following enterprise risk examples, you will find scenarios and details of how organizations manage the risks they face.

Scenario: ERM and the Global Pandemic While most businesses do not have the resources to do in-depth ERM planning for the rare occurrence of a global pandemic, companies with a risk-aware culture will be at an advantage if a pandemic does hit. 

These businesses already have processes in place to escalate trouble signs for immediate attention and an ERM team or leader monitoring the threat environment. A strong ERM function gives clear and effective guidance that helps the company respond.

A report by Vodafone found that companies identified as “future ready” fared better in the COVID-19 pandemic. The attributes of future-ready businesses have a lot in common with those of companies that excel at ERM. These include viewing change as an opportunity; having detailed business strategies that are documented, funded, and measured; working to understand the forces that shape their environments; having roadmaps in place for technological transformation; and being able to react more quickly than competitors. 

Only about 20 percent of companies in the Vodafone study met the definition of “future ready.” But 54 percent of these firms had a fully developed and tested business continuity plan, compared to 30 percent of all businesses. And 82 percent felt their continuity plans worked well during the COVID-19 crisis. Nearly 50 percent of all businesses reported decreased profits, while 30 percent of future-ready organizations saw profits rise. 

Scenario: ERM and the Economic Crisis  The 2008 economic crisis in the United States resulted from the domino effect of rising interest rates, a collapse in housing prices, and a dramatic increase in foreclosures among mortgage borrowers with poor creditworthiness. This led to bank failures, a credit crunch, and layoffs, and the U.S. government had to rescue banks and other financial institutions to stabilize the financial system.

Some commentators said these events revealed the shortcomings of ERM because it did not prevent the banks’ mistakes or collapse. But Sim Segal, an ERM consultant and director of Columbia University’s ERM master’s degree program, analyzed how banks performed on 10 key ERM criteria. 

Segal says a risk-management program that incorporates all 10 criteria has these characteristics: 

• Risk management has an enterprise-wide scope.
• The program includes all risk categories: financial, operational, and strategic. 
• The focus is on the most important risks, not all possible risks. 
• Risk management is integrated across risk types.
• Aggregated metrics show risk exposure and appetite across the enterprise.
• Risk management incorporates decision-making, not just reporting.
• The effort balances risk and return management.
• There is a process for disclosure of risk.
• The program measures risk in terms of potential impact on company value.
• The focus of risk management is on the primary stakeholder, such as shareholders, rather than regulators or rating agencies.

In his book Corporate Value of Enterprise Risk Management , Segal concluded that most banks did not actually use ERM practices, which contributed to the financial crisis. He scored banks as failing on nine of the 10 criteria, only giving them a passing grade for focusing on the most important risks. 

Scenario: ERM and Technology Risk  The story of retailer Target’s failed expansion to Canada, where it shut down 133 loss-making stores in 2015, has been well documented. But one dimension that analysts have sometimes overlooked was Target’s handling of technology risk. 

A case study by Canadian Business magazine traced some of the biggest issues to software and data-quality problems that dramatically undermined the Canadian launch. 

As with other forms of ERM, technology risk management requires companies to ask what could go wrong, what the consequences would be, how they might prevent the risks, and how they should deal with the consequences. 

But with its technology plan for Canada, Target did not heed risk warning signs. 

In the United States, Target had custom systems for ordering products from vendors, processing items at warehouses, and distributing merchandise to stores quickly. But that software would need customization to work with the Canadian dollar, metric system, and French-language characters. 

Target decided to go with new ERP software on an aggressive two-year timeline. As Target began ordering products for the Canadian stores in 2012, problems arose. Some items did not fit into shipping containers or on store shelves, and information needed for customs agents to clear imported items was not correct in Target's system. 

Target found that its supply chain software data was full of errors. Product dimensions were in inches, not centimeters; height and width measurements were mixed up. An internal investigation showed that only about 30 percent of the data was accurate. 

In an attempt to fix these errors, Target merchandisers spent a week double-checking with vendors up to 80 data points for each of the retailer’s 75,000 products. They discovered that the dummy data entered into the software during setup had not been altered. To make any corrections, employees had to send the new information to an office in India where staff would enter it into the system. 

As the launch approached, the technology errors left the company vulnerable to stockouts, few people understood how the system worked, and the point-of-sale checkout system did not function correctly. Soon after stores opened in 2013, consumers began complaining about empty shelves. Meanwhile, Target Canada distribution centers overflowed due to excess ordering based on poor data fed into forecasting software. 

The rushed launch compounded problems because it did not allow the company enough time to find solutions or alternative technology. While the retailer fixed some issues by the end of 2014, it was too late. Target Canada filed for bankruptcy protection in early 2015. 

Scenario: ERM and Cybersecurity System hacks and data theft are major worries for companies. But as a relatively new field, cyber-risk management faces unique hurdles.

For example, risk managers and information security officers have difficulty quantifying the likelihood and business impact of a cybersecurity attack. The rise of cloud-based software exposes companies to third-party risks that make these projections even more difficult to calculate. 

As the field evolves, risk managers say it’s important for IT security officers to look beyond technical issues, such as the need to patch a vulnerability, and instead look more broadly at business impacts to make a cost benefit analysis of risk mitigation. Frameworks such as the Risk Management Framework for Information Systems and Organizations by the National Institute of Standards and Technology can help.  

Health insurer Aetna considers cybersecurity threats as a part of operational risk within its ERM framework and calculates a daily risk score, adjusted with changes in the cyberthreat landscape. 

Aetna studies threats from external actors by working through information sharing and analysis centers for the financial services and health industries. Aetna staff reverse-engineers malware to determine controls. The company says this type of activity helps ensure the resiliency of its business processes and greatly improves its ability to help protect member information.

For internal threats, Aetna uses models that compare current user behavior to past behavior and identify anomalies. (The company says it was the first organization to do this at scale across the enterprise.) Aetna gives staff permissions to networks and data based on what they need to perform their job. This segmentation restricts access to raw data and strengthens governance. 

Another risk initiative scans outgoing employee emails for code patterns, such as credit card or Social Security numbers. The system flags the email, and a security officer assesses it before the email is released.

Examples of Poor Enterprise Risk Management

Case studies of failed enterprise risk management often highlight mistakes that managers could and should have spotted — and corrected — before a full-blown crisis erupted. The focus of these examples is often on determining why that did not happen. 

ERM Case Study: General Motors

In 2014, General Motors recalled the first of what would become 29 million cars due to faulty ignition switches and paid compensation for 124 related deaths. GM knew of the problem for at least 10 years but did not act, the automaker later acknowledged. The company entered a deferred prosecution agreement and paid a $900 million penalty. 

Pointing to the length of time the company failed to disclose the safety problem, ERM specialists say it shows the problem did not reside with a single department. “Rather, it reflects a failure to properly manage risk,” wrote Steve Minsky, a writer on ERM and CEO of an ERM software company, in Risk Management magazine. 

“ERM is designed to keep all parties across the organization, from the front lines to the board to regulators, apprised of these kinds of problems as they become evident. Unfortunately, GM failed to implement such a program, ultimately leading to a tragic and costly scandal,” Minsky said.

Also in the auto sector, an enterprise risk management case study of Toyota looked at its problems with unintended acceleration of vehicles from 2002 to 2009. Several studies, including a case study by Carnegie Mellon University Professor Phil Koopman , blamed poor software design and company culture. A whistleblower later revealed a coverup by Toyota. The company paid more than $2.5 billion in fines and settlements.

ERM Case Study: Lululemon

In 2013, following customer complaints that its black yoga pants were too sheer, the athletic apparel maker recalled 17 percent of its inventory at a cost of $67 million. The company had previously identified risks related to fabric supply and quality. The CEO said the issue was inadequate testing. 

Analysts raised concerns about the company’s controls, including oversight of factories and product quality. A case study by Stanford University professors noted that Lululemon’s episode illustrated a common disconnect between identifying risks and being prepared to manage them when they materialize. Lululemon’s reporting and analysis of risks was also inadequate, especially as related to social media. In addition, the case study highlighted the need for a system to escalate risk-related issues to the board. 

ERM Case Study: Kodak 

Once an iconic brand, the photo film company failed for decades to act on the threat that digital photography posed to its business and eventually filed for bankruptcy in 2012. The company’s own research in 1981 found that digital photos could ultimately replace Kodak’s film technology and estimated it had 10 years to prepare. 

Unfortunately, Kodak did not prepare and stayed locked into the film paradigm. The board reinforced this course when in 1989 it chose as CEO a candidate who came from the film business over an executive interested in digital technology. 

Had the company acknowledged the risks and employed ERM strategies, it might have pursued a variety of strategies to remain successful. The company’s rival, Fuji Film, took the money it made from film and invested in new initiatives, some of which paid off. Kodak, on the other hand, kept investing in the old core business.

Case Studies of Successful Enterprise Risk Management

Successful enterprise risk management usually requires strong performance in multiple dimensions, and is therefore more likely to occur in organizations where ERM has matured. The following examples of enterprise risk management can be considered success stories. 

ERM Case Study: Statoil 

A major global oil producer, Statoil of Norway stands out for the way it practices ERM by looking at both downside risk and upside potential. Taking risks is vital in a business that depends on finding new oil reserves. 

According to a case study, the company developed its own framework founded on two basic goals: creating value and avoiding accidents.

The company aims to understand risks thoroughly, and unlike many ERM programs, Statoil maps risks on both the downside and upside. It graphs risk on probability vs. impact on pre-tax earnings, and it examines each risk from both positive and negative perspectives. 

For example, the case study cites a risk that the company assessed as having a 5 percent probability of a somewhat better-than-expected outcome but a 10 percent probability of a significant loss relative to forecast. In this case, the downside risk was greater than the upside potential.

ERM Case Study: Lego 

The Danish toy maker’s ERM evolved over the following four phases, according to a case study by one of the chief architects of its program:

• Traditional management of financial, operational, and other risks. Strategic risk management joined the ERM program in 2006. 
• The company added Monte Carlo simulations in 2008 to model financial performance volatility so that budgeting and financial processes could incorporate risk management. The technique is used in budget simulations, to assess risk in its credit portfolio, and to consolidate risk exposure. 
• Active risk and opportunity planning is part of making a business case for new projects before final decisions.
• The company prepares for uncertainty so that long-term strategies remain relevant and resilient under different scenarios. 

As part of its scenario modeling, Lego developed its PAPA (park, adapt, prepare, act) model. 

• Park: The company parks risks that occur slowly and have a low probability of happening, meaning it does not forget nor actively deal with them.
• Adapt: This response is for risks that evolve slowly and are certain or highly probable to occur. For example, a risk in this category is the changing nature of play and the evolution of buying power in different parts of the world. In this phase, the company adjusts, monitors the trend, and follows developments.
• Prepare: This category includes risks that have a low probability of occurring — but when they do, they emerge rapidly. These risks go into the ERM risk database with contingency plans, early warning indicators, and mitigation measures in place.
• Act: These are high-probability, fast-moving risks that must be acted upon to maintain strategy. For example, developments around connectivity, mobile devices, and online activity are in this category because of the rapid pace of change and the influence on the way children play. 

Lego views risk management as a way to better equip itself to take risks than its competitors. In the case study, the writer likens this approach to the need for the fastest race cars to have the best brakes and steering to achieve top speeds.

ERM Case Study: University of California 

The University of California, one of the biggest U.S. public university systems, introduced a new view of risk to its workforce when it implemented enterprise risk management in 2005. Previously, the function was merely seen as a compliance requirement.

ERM became a way to support the university’s mission of education and research, drawing on collaboration of the system’s employees across departments. “Our philosophy is, ‘Everyone is a risk manager,’” Erike Young, deputy director of ERM told Treasury and Risk magazine. “Anyone who’s in a management position technically manages some type of risk.”

The university faces a diverse set of risks, including cybersecurity, hospital liability, reduced government financial support, and earthquakes.  

The ERM department had to overhaul systems to create a unified view of risk because its information and processes were not linked. Software enabled both an organizational picture of risk and highly detailed drilldowns on individual risks. Risk managers also developed tools for risk assessment, risk ranking, and risk modeling. 

Better risk management has provided more than $100 million in annual cost savings and nearly $500 million in cost avoidance, according to UC officials. 

UC drives ERM with risk management departments at each of its 10 locations and leverages university subject matter experts to form multidisciplinary workgroups that develop process improvements.

APQC, a standards quality organization, recognized UC as a top global ERM practice organization, and the university system has won other awards. The university says in 2010 it was the first nonfinancial organization to win credit-rating agency recognition of its ERM program.

Examples of How Technology Is Transforming Enterprise Risk Management

Business intelligence software has propelled major progress in enterprise risk management because the technology enables risk managers to bring their information together, analyze it, and forecast how risk scenarios would impact their business.

ERM organizations are using computing and data-handling advancements such as blockchain for new innovations in strengthening risk management. Following are case studies of a few examples.

ERM Case Study: Bank of New York Mellon 

In 2021, the bank joined with Google Cloud to use machine learning and artificial intelligence to predict and reduce the risk that transactions in the $22 trillion U.S. Treasury market will fail to settle. Settlement failure means a buyer and seller do not exchange cash and securities by the close of business on the scheduled date. 

The party that fails to settle is assessed a daily financial penalty, and a high level of settlement failures can indicate market liquidity problems and rising risk. BNY says that, on average, about 2 percent of transactions fail to settle.

The bank trained models with millions of trades to consider every factor that could result in settlement failure. The service uses market-wide intraday trading metrics, trading velocity, scarcity indicators, volume, the number of trades settled per hour, seasonality, issuance patterns, and other signals. 

The bank said it predicts about 40 percent of settlement failures with 90 percent accuracy. But it also cautioned against overconfidence in the technology as the model continues to improve. 

AI-driven forecasting reduces risk for BNY clients in the Treasury market and saves costs. For example, a predictive view of settlement risks helps bond dealers more accurately manage their liquidity buffers, avoid penalties, optimize their funding sources, and offset the risks of failed settlements. In the long run, such forecasting tools could improve the health of the financial market. 

ERM Case Study: PwC

Consulting company PwC has leveraged a vast information storehouse known as a data lake to help its customers manage risk from suppliers.

A data lake stores both structured or unstructured information, meaning data in highly organized, standardized formats as well as unstandardized data. This means that everything from raw audio to credit card numbers can live in a data lake. 

Using techniques pioneered in national security, PwC built a risk data lake that integrates information from client companies, public databases, user devices, and industry sources. Algorithms find patterns that can signify unidentified risks.

One of PwC’s first uses of this data lake was a program to help companies uncover risks from their vendors and suppliers. Companies can violate laws, harm their reputations, suffer fraud, and risk their proprietary information by doing business with the wrong vendor. 

Today’s complex global supply chains mean companies may be several degrees removed from the source of this risk, which makes it hard to spot and mitigate. For example, a product made with outlawed child labor could be traded through several intermediaries before it reaches a retailer. 

PwC’s service helps companies recognize risk beyond their primary vendors and continue to monitor that risk over time as more information enters the data lake.

ERM Case Study: Financial Services

As analytics have become a pillar of forecasting and risk management for banks and other financial institutions, a new risk has emerged: model risk . This refers to the risk that machine-learning models will lead users to an unreliable understanding of risk or have unintended consequences.

For example, a 6 percent drop in the value of the British pound over the course of a few minutes in 2016 stemmed from currency trading algorithms that spiralled into a negative loop. A Twitter-reading program began an automated selling of the pound after comments by a French official, and other selling algorithms kicked in once the currency dropped below a certain level.

U.S. banking regulators are so concerned about model risk that the Federal Reserve set up a model validation council in 2012 to assess the models that banks use in running risk simulations for capital adequacy requirements. Regulators in Europe and elsewhere also require model validation.

A form of managing risk from a risk-management tool, model validation is an effort to reduce risk from machine learning. The technology-driven rise in modeling capacity has caused such models to proliferate, and banks can use hundreds of models to assess different risks. 

Model risk management can reduce rising costs for modeling by an estimated 20 to 30 percent by building a validation workflow, prioritizing models that are most important to business decisions, and implementing automation for testing and other tasks, according to McKinsey.

Streamline Your Enterprise Risk Management Efforts with Real-Time Work Management in Smartsheet

Empower your people to go above and beyond with a flexible platform designed to match the needs of your team — and adapt as those needs change. 

The Smartsheet platform makes it easy to plan, capture, manage, and report on work from anywhere, helping your team be more effective and get more done. Report on key metrics and get real-time visibility into work as it happens with roll-up reports, dashboards, and automated workflows built to keep your team connected and informed. 

When teams have clarity into the work getting done, there’s no telling how much more they can accomplish in the same amount of time.  Try Smartsheet for free, today.

Discover why over 90% of Fortune 100 companies trust Smartsheet to get work done.

• Show all results for " "

Risk Management Final Exam Prep with 55 MCQs and Case Study

More actions.

• PDF Questions
• Make a copy

Questions and Answers

What is the primary aim of risk assessment in healthcare settings.

• To accept all risks without mitigation
• To identify and evaluate common sources of risk (correct)
• To avoid any risk management strategies
• To transfer risks to insurance companies

Which step is considered the first in the risk management process in healthcare settings?

• Risk response strategy implementation
• Risk identification and evaluation (correct)
• Risk acceptance
• Risk transfer to insurance companies

What are the common sources of risk in healthcare settings typically used for?

• Transferring risks to insurance companies
• Avoiding risk management strategies altogether
• Assessing severity and likelihood of risks (correct)
• Accepting all risks without assessment

Which risk mitigation strategy involves taking actions to reduce the severity of risks?

<p>Risk reduction</p> Signup and view all the answers

In what way do healthcare settings typically transfer risk as part of the mitigation process?

<p>Through insurance companies</p> Signup and view all the answers

What is the significance of a case study in the context of the 55 MCQs mentioned?

<p>Case studies provide real-world applications of theoretical knowledge</p> Signup and view all the answers

Which risk response strategy involves avoiding the identified risks altogether?

<p>Risk avoidance</p> Signup and view all the answers

What does the common sources tool assist in determining for healthcare risks?

<p>Severity and likelihood of risks</p> Signup and view all the answers

Why is it crucial for healthcare settings to have a thorough understanding of common sources of risk?

<p>'Risk mitigation' strategies depend on accurate identification of common sources</p> Signup and view all the answers

Which action is part of a risk response strategy aimed at reducing the severity of risks in healthcare?

<p>Implementing actions to reduce identified risks</p> Signup and view all the answers

What is the primary goal of risk communication in healthcare settings?

<p>To minimize adverse events</p> Signup and view all the answers

Why is effective risk communication important in healthcare?

<p>To enhance patient safety</p> Signup and view all the answers

Which of the following represents a barrier to effective risk communication in healthcare?

<p>Lack of trust between providers and patients</p> Signup and view all the answers

What strategy can enhance risk communication in healthcare organizations?

<p>Implementing open-door policies</p> Signup and view all the answers

Effective risk reporting in healthcare is best achieved through what steps?

<p>Ensuring transparency and timeliness</p> Signup and view all the answers

In the event of a medication error, the best immediate approach to risk communication would be to do what?

<p>Communicate openly about the error</p> Signup and view all the answers

Which approach to risk reporting is most likely to contribute to an improvement in patient safety culture?

<p>Promoting a transparent and learning-focused approach</p> Signup and view all the answers

What task will be performed while identifying risks?

<p>Understanding potential threats and vulnerabilities</p> Signup and view all the answers

What describes the cause of your risk?

<p>Risk Register</p> Signup and view all the answers

Which step is used to determine the risks that have the greatest effect on health care facility objectives?

<p>Assessment Planning</p> Signup and view all the answers

What would be the first step a healthcare manager takes when assessing the risk of a new surgical procedure?

<p>Review previous case studies</p> Signup and view all the answers

In a situation where there is a high likelihood of failure but low impact on patient safety, what would be the most appropriate risk response?

<p>Accept the risk and proceed</p> Signup and view all the answers

In a healthcare facility experiencing an increase in patient falls in their geriatric unit, which risk management step should be prioritized to address this issue?

<p>Staff training on fall prevention</p> Signup and view all the answers

If a high number of post-surgical infections were traced back to a specific operating room during a routine risk assessment, what would be the most appropriate initial risk response?

<p>Implement strict hygiene protocols</p> Signup and view all the answers

When planning to implement a new electronic health record system, which of the following risks should be assessed first?

<p>Data security risks</p> Signup and view all the answers

After identifying an increased risk of medication errors in the pediatric unit, what would be the most effective mitigation strategy?

<p>Implement automated medication dispensing systems</p> Signup and view all the answers

In a community health clinic with a significant risk of spreading infectious diseases due to overcrowding, what would be the most appropriate mitigation strategy?

<p>Enhance cleaning protocols</p> Signup and view all the answers

Following a data breach involving patient information in a healthcare setting, what should organizations do first?

<p>Conduct a thorough investigation</p> Signup and view all the answers

'Under Billing' in financial risk management refers to what?

<p>'Underpaying' vendors for services rendered</p> Signup and view all the answers

What financial risk management strategy might be employed when considering the adoption of a new electronic health record system with high upfront costs?

<p>Share costs with other facilities through partnerships</p> Signup and view all the answers

Which of the following is an invalid type of response when planning responses to threats?

<p>Collaboration</p> Signup and view all the answers

Which of the following is not a technique for building and developing awareness of risk management?

<p>Risk transfer agreements</p> Signup and view all the answers

What is not a benefit of effective risk management?

<p>Increased complexity</p> Signup and view all the answers

Which best describes the reduction threat response?

<p>Implementing measures to lessen the impact of the risk</p> Signup and view all the answers

If the frequency of financial loss is low but the severity is high in a healthcare setting, which risk management tool is most appropriate?

<p>Risk transfer</p> Signup and view all the answers

Which principle is fundamental in risk management?

<p>Transparency</p> Signup and view all the answers

What aspect is crucial in developing an effective risk management strategy?

<p>Continuous monitoring and assessment</p> Signup and view all the answers

'Acceptance', 'Mitigation', and 'Transference' are common responses related to which phase of risk management?

<p><em>Risk Response Planning</em></p> Signup and view all the answers

'Risk Appetite' and 'Risk Tolerance' are essential concepts in which aspect of risk management?

<p><em>Risk Evaluation</em></p> Signup and view all the answers

What is the primary goal of a risk register?

<p>Identify risks</p> Signup and view all the answers

Which task is typically performed during the identification of risks?

<p>Identifying potential risks</p> Signup and view all the answers

In the context of organizational activities, what is the recommended technique for understanding the organizational environment?

<p>SWOT analysis</p> Signup and view all the answers

Which step is used to determine risks that have the greatest impact on healthcare facility objectives?

<p>Planning responses</p> Signup and view all the answers

Where should risk management ideally be carried out?

<p>Everywhere in the organization</p> Signup and view all the answers

Which of the following are key principles in risk management?

<p>Transparency and open communication</p> Signup and view all the answers

When planning responses to threats, which type of response is considered invalid?

<p>'Denial'</p> Signup and view all the answers

Which of the following is not a benefit of effective risk management?

<p>Increased financial losses</p> Signup and view all the answers

What best describes a reduction threat response in risk management?

<p>Taking actions to minimize the impact of the risk</p> Signup and view all the answers

If the frequency of financial loss in a healthcare setting is low but the severity is high, what is the most appropriate risk management tool to use?

Which technique is not used for building and developing awareness of risk management.

<p>Financial investment analysis</p> Signup and view all the answers

In healthcare settings, what is a common misconception about risk response strategies?

<p>Mitigation is always possible for every risk</p> Signup and view all the answers

When assessing risks in healthcare, what is a key consideration that distinguishes successful risk management?

<p>The speed of risk response implementation</p> Signup and view all the answers

What should be prioritized when faced with a low-frequency, high-severity risk in healthcare management?

<p>Eliminating the risk entirely</p> Signup and view all the answers

Study Notes

Risk management.

• Risk management involves assessing risks, taking actions to mitigate or respond to risks, and monitoring risks.
• Risks can be categorized into high, medium, and low risks based on their likelihood and impact.

Risk Assessment

• The first step in risk management is to identify risks, followed by assessing their likelihood and impact.
• A risk matrix is used to assess risks, considering both likelihood and impact.
• High likelihood but low impact on patient safety may require a risk response that focuses on mitigation.

Risk Response

• Risk responses include accept, transfer, mitigate, and avoid.
• Acceptance involves taking no action to mitigate the risk.
• Transfer involves shifting the risk to another party, such as insurance companies.
• Mitigation involves taking actions to reduce the risk.
• Avoidance involves eliminating the risk by avoiding the activity or situation that creates the risk.

Risk Management Principles

• Risk management principles include proactive risk management, risk assessment, risk response, and continuous monitoring and review.
• Effective risk management involves considering the likelihood and impact of risks, as well as the potential consequences of not taking action.

Financial Risk Management

• Financial risk management is primarily concerned with managing revenue and expenses.
• Revenue cycle management involves managing the billing and collection of payments from patients.
• Under billing refers to the practice of billing patients for less than the full amount owed.

Mitigation Strategies

• Mitigation strategies include reducing the likelihood or impact of risks, or transferring the risk to another party.
• Effective risk management involves identifying and assessing risks, and implementing mitigation strategies to reduce or eliminate risks.

Risk Communication

• The primary goal of risk communication is to inform patients and stakeholders about risks and risk management strategies.
• Effective risk communication involves being open, honest, and transparent about risks and risk management strategies.
• Barriers to effective risk communication include lack of trust between healthcare providers and patients.

Risk Reporting

• Risk reporting involves identifying, assessing, and reporting risks to stakeholders.
• Effective risk reporting involves using data and analytics to identify trends and patterns in risk data.

Risk Management Tools

• Risk management tools include risk registers, which are used to track and monitor risks.
• Risk registers have a goal of identifying risks and their impact on healthcare facilities' objectives.
• SWOT analysis is a technique used to identify risks and opportunities.

Risk Management in Healthcare

• Risk management is an essential component of healthcare management.
• Healthcare organizations should have a risk management strategy in place to identify, assess, and mitigate risks.
• Risk management should be carried out throughout the healthcare organization, including at the departmental and unit levels.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Prepare for the risk management final exam with 55 multiple choice questions (MCQs) and one case study. Each MCQ is worth 1% and the case study counts for 10%. Test your knowledge on various aspects of risk management to ace the final exam.

More Quizzes Like This

Risk Management Stages Quiz

Risk Management Overview

Entrepreneurship and Risk Management

Risk Management in Military Operations

Upgrade to continue

Today's Special Offer

Save an additional 20% with coupon: SAVE20

Upgrade to a paid plan to continue

Trusted by top students and educators worldwide

We are constantly improving Quizgecko and would love to hear your feedback. You can also submit feature requests here: feature requests.

Create your free account

By continuing, you agree to Quizgecko's Terms of Service and Privacy Policy .

Table of Contents

How do you prepare for a risk management interview, 35 top risk management interview questions and answers, practice interview questions for risk management , career opportunities for risk managers, latest trends in risk management, key risk management interview questions and answers [2024].

What can be a better contribution to any business or organization than preventing it from problems? Known as risk management professionals, they are valuable assets for companies. These skilled individuals can help foresee the issues, challenges, and risks while effectively managing them on occurrence.

With 41 percent of organizations reporting that they experienced three or more critical risk events in the last 12 months, vigilant companies are looking for risk management professionals .

If you are a proud and capable candidate willing to showcase your expertise in the field, have a walkthrough of the risk management interview questions and answers. 

Preparing for risk manager interview questions requires both a generalized and specific-level approach. While you must have general risk management-specific information, you must also know the company’s needs. 

• When applying for a specific role at the company, you must be aware of the problems the company is currently facing and potential solutions to them. They can be in project management , operation, compliance with regulatory laws, or any other sector. 
• For risk management-specific preparation, we recommend brushing up on your fundamental knowledge and concepts with relevant tools and frameworks. Additionally, gain advanced knowledge emphasizing AI usage, recently launched software, updated regulations and other aspects. 
• Talk about your past experiences to offer insights when asked about behavioral questions. 
• Work to gain relevant quantitative skills, or if you already have them, ensure that you demonstrate them through your experiences or job responsibilities. 
• Exhibit your strategic thinking and other approaches to effective management. Inquire about the company's details, such as reporting structure, specific challenges, and other associated questions, to demonstrate your skills and abilities in risk management. 
• Take part in mock interviews while also practicing through case studies. This will help you revise your concepts while offering exposure to problems based on updated challenges and recent trends. 

Find the risk management interview questions and answers here. We have offered insights into what the recruiter wants to judge by asking a specific question and how to answer it. With the given cues, create a customized answer for yourself. 

1. Explain risk management. 

The recruiter wants to judge your perspective and outlook on risk management through such risk assessment interview questions. While defining risk management, you will also include points of emphasis based on your experience and understanding. You can also talk about the impact of risk management, the approaches, tools, scale of measurements, components, and other associated factors. 

2. How do you identify the possible risks during the design stage of a new project? 

The answer will require you to state your preferred or situation-based approach to risk identification. Risk registers and SWOT analysis are common examples that can be used here. Further, qualitative or quantitative methods of risk analysis, along with an analysis of their impact, can also be included here. 

3. What is the role of risk management in risk mitigation? 

With this or similar risk management interview questions, the interviewers want to evaluate the methods of risk mitigation that you can apply. You can answer this question with examples and associated measures that can help mitigate risk. 

4. What are the risk management techniques? 

It is a direct question where you can put in either your theoretical knowledge or practical approach or even both. Combining the two can help you to impress the recruiters. You can also shed light on field-specific techniques . 

Become a Project Management Professional

• 6% Growth In Jobs Of Project Management Profiles By 2024
• 22 Million Jobs Estimated For Project Management Professionals By 2027

PMP® Certification Training

• Access to Digital Materials from PMI
• 12 Full-Length Simulation Test Papers (180 Questions Each)

Professional Certificate Program in Project Management

• Receive a course completion certificate and UMass Alumni Association membership
• Learn from industry professionals and certified instructors who bring years of practical experience and expertise to the classroom

Here's what learners are saying regarding our programs:

Katrina Tanchoco

Shell - manila ,.

The interactive sessions make a huge difference as I'm able to ask for further clarifications. The training sessions are more engaging than the self-paced modules, it's easier now that i first decided to take up the online classroom training, and then followed it up with the self-paced learning (online and readings).

PHC Business Manager , Midlands and Lancashire Commissioning Support Unit

I wanted to transition into the Project Management field and wanted the right opportunity to do so. Thus, I took that leap forward and enrolled in this course. My learning experience was fantastic. It suited my learning style.

5. What factors will determine the appropriate contingency reserve level for any specific project? 

The question requires you to answer all the factors important to the project that will be crucial in determining the reserve level. You can indicate factors like previous projects, experiences, the possibility of risks, the intensity of the consequences and project complexity. 

6. How do you conduct a risk assessment on cybersecurity-related tasks?

You will state the sequence of steps to be taken for cybersecurity risk assessments. Evaluating your tech-based knowledge, you must mention possible cybersecurity threats, vulnerability assessments, likelihood or probability of occurrence and quantity of impact.

7. Brief us on the time when you tackled a major risk that hindered project success. 

If you have worked on the stated scenario, it is recommended that you indicate detailed aspects of the same. You can also discuss failures while focusing on your learnings or coupling them with positive results. If you have not experienced such a time, you can either relate it to a similar experience or offer a hypothetical solution to the problem. Your solution must include critical aspects of risk assessment, management, strategy, points of focus and logic behind each decision. 

8. Enlighten us on the procedure you follow for creating a risk management plan for a new project. 

We recommend providing stepwise information on the procedure you should follow. Ensure it encompasses all the basic steps, such as risk identification, analysis, planning the response, execution and monitoring. You can discuss the reason for your steps based on possible problems you might encounter. 

9. Enlighten us on the procedure you follow to modify the risk management plan for an already existing project. 

In this question, you will emphasize the need to understand the current plan and its shortcomings. You will also have to analyze the existing risks and associated impact and then reassess the overall risk. Offer the strategies and technical aspects that can be taken based on the hypothetical situation. 

10. Differentiate between the risk and issue, along with your method of handling each of these.

You must emphasize here that the risk is a potential problem yet to occur and the issue is an already existing problem. You will also state the difference in approach used for both. For instance, there will be predictable mitigation strategies for risk while resolving approaches for issues. 

11. Describe your experience of a failed risk management plan. 

You will be answering this with the actual failure you experienced, the reason for its occurrence, the impact it had and the newer methods you suggested or took to minimize the problems. It is necessary to emphasize your learnings and best practices you can take to avoid the recurrence of such issues as constant monitoring, auditing and other approaches. You should avoid blaming or giving up on the situation. 

12. What are your methods for risk monitoring and controlling? 

Recruiters want to evaluate the different possible paths that you can take to monitor and control the risks. It can include checking the shortcomings in existing processes, analysis of the probability of risks and development or usage of systems and processes for monitoring and timely action for control. You can add your personal insights or unique approaches to the answer. 

13. State some common risks in the industry.

The answer will vary depending on the type of industry the candidate is interviewing for. While there will be certain general risks, such as market, technical , schedule, and resource risks, there are also industry-specific risks. These include safety hazards in the construction industry, cybersecurity breaches in the IT industry, regulatory compliance in the healthcare industry and similar risks. 

14. What is your strategy for handling stakeholders during risk management? 

You are to demonstrate your communication abilities and problem-solving skills, as well as your ability to manage technical details. You can discuss active listening, understanding, transparent and open communication, trust building, regular updates, conflict handling and mutual decision-making. 

15. Explain the relation between your previous role and current position. 

The question offers you an opportunity to exhibit the experience and skills you learned from your previous job. Highlight the important aspects concerning risk assessment, identification, mitigation strategies, monitoring and control. You can also express your experience in risk reporting, stakeholder handling, compliance management, and other role-specific tasks you have worked on. 

16. What are your preferred measures to ensure the running of the business while facing potential risks? 

It is an important question that helps companies analyze your problem-solving skills and evaluate your importance to the company. The candidate can begin by describing the importance of a business continuity plan and its positive impact.  The answer can be tackled with industry-specific approaches like supply diversification, enhancement of cybersecurity measures, evaluating redundancies in critical systems, communication protocols , implementation of backup systems and utilizing insurance coverage. 

17. Tell us about the risk register. 

The recruiter wants to analyze your understanding of the importance of risk management principles and your ability to apply them effectively, your documentation skills, and your approach to understanding and assessing the risk with effective mitigation. You can talk about your ability to adapt and solve problems encountered in the documentation process. It is beneficial if you offer a newer perspective on the process. 

18. Discuss the Delphi technique in risk management. 

You can either describe the basics and couple them with information on when you applied the Delphi technique. If you haven’t, it is nice to state the scenarios when the technique can be applied or its applications, impacts and intricacies. 

19. Tell about the time when you had to make the decision to choose a specific and least preferred solution to a problem and what its impact was. 

The recruiter wants to check the presence of a stern and unwavering attitude in your decision, the reason for your choice, and your way of handling it regardless of the result. It is best to state the actual or hypothetical situation based on your experience and demonstrate your problem-solving skills. You will have to show the analytical steps and rationale behind the decision. You can talk about your adaptability to the decision and on the basis of subsequent consequences while exhibiting your responsible nature.

20. What do you understand about correlated risks? 

The interviewer wants to evaluate your viewpoint and understanding of the complex association between the cause-and-effect relationship. It is essential since this understanding decides your judgment and decision-making. You can demonstrate your experience or understanding with clear definitions and practical examples of related tasks. Alternatively, you can take an example to explain the impact or influence on risk management strategies. 

21. Which skills do you possess that make you suitable for this role? 

It is the direct question to judge your candidacy for the role. Don’t only enlist; rather, expand on the right skills that you possess. Back them with the example of their application or state which work of yours helped you learn them. Express yourself as a candidate who can use the right skills to deal with risks and threats whenever required. 

22. What is your management style? 

The interviewer wants to know ‘you’; hence, one of the must-avoid things is to give an answer you read somewhere. Contrarily, the answer should be framed to reflect your ideology, rationale and experience. Curate your own answer. With this, we mean while you state a specific style, state why you prefer it more and how it is better suited for the situation. Do indicate your adaptability and flexibility if the situation demands. 

23. What would you do if someone points out your mistake at work? 

It is a collaborative question that evaluates both your hard and soft skills. They want to assess your attitude and behavior toward being wrong and how you handle it. An ideal candidate will take responsibility for work and reflect on their actions to avoid repetition. They will offer solutions to correct things while devoting their best to making up for the losses. 

24. What are the commonly used tools for risk management?

You can exhibit the practical experience gained through learning, internship, or a practical or previous job. Enlist all the tools you are proficient in and the other ones you might have used less frequently. Some commonly used tools are FMEA, decision trees , bowtie model and risk matrix. 

25. Why do you want to become a risk manager? 

You can offer insights into your specific strengths or genuine reasons that led you to choose the career path. Your interest in problem-solving, eye for observation, ability to research or predict well based on the given data, and desire to contribute to the sustainability of projects or organizations can also be shared. Additionally, the relevance of job roles to your career goals also makes an effective answer to the question. 

26. Tell me about your experience and perspective change in the risk management industry. 

The question is directed toward what you have learned from your time spent in the industry. The commonly witnessed change in perspective includes switching from a reactive to a proactive approach, prioritizing the risk assessment, and accepting the need for continuous improvement and flexibility in decision-making. 

27. What is your preferred method to calculate the potential risks of an investment? 

You can categorize the specific methods in qualitative and quantitative analysis to analyze the potential risks. Further, do consider talking about the root cause and scenario analysis, risk rating and ranking, along with exhibiting the importance of continuous monitoring and review. 

28. How do you prioritize risks? 

This is an essential question offering insights into your thought process and understanding of the importance of risk management. You can answer this by providing an example. Alternatively, you can provide steps or important factors to prioritize and their impact you consider during risk prioritization. 

29. How do you manage team members' disagreements on the risk mitigation strategy? 

The question evaluates your leadership quality, approach to conflict resolution and communication skills. It is important to exhibit your acknowledgment of different perspectives. Further, demonstrate your leadership quality by emphasizing your ability to actively listen, consider the reason, and decide based on logical judgment. Do talk about your strategies for resolving the conflicts, which must include direct and smooth communication, compromise, negotiation, and addressing the strengths and weaknesses of the plan. 

30. What’s your viewpoint on the incorporation of AI in risk management? 

The recruiter wants to determine whether you are updated on current trends. While you may or may not have prior experience using AI in risk management, it is essential to be familiar with the processes and associated aspects. Talk about the benefits, limitations and challenges. You can also consider reflecting on the time and cost efficiency witnessed by using AI. 

31. Help us understand your approach to handling uncertainty and ambiguity in project risk management. 

Answer this question by acknowledging the given situation and heading forward to talk about your strategies. Enlighten them about the possibility of flexibility in your plans, including scenario and contingency planning, and talk about the importance of effective communication in handling the situation. Also, you must mandatorily discuss your decision-making ability under uncertainty. 

32. Tell us about the Risk Breakdown Structure (RBS). 

The interviewer will ask this question to understand your practical knowledge of risk management. Begin by defining the RBS, followed by information on its purpose, components, development process and its application in risk management. 

33. How do you convince people to exercise seriousness toward risk management? 

This answer must describe your leadership and management capability and grasp of knowledge. Begin by explaining your understanding of the importance of risk management and then move on to the measures you will use to convince the non-serious people on your team. Then, describe your approach to team member engagement, which can include education and awareness on the alignment of risk management with organizational goals and its importance. Focus on communication to answer this question. 

34. How do you stay updated with the latest developments and trends in risk management? 

You can answer about different modes that allow you to remain updated. The common examples include keeping your certification active by learning from study materials, attending workshops, conferences and seminars, being active in forums or groups, and keeping up with networking events, meetups and similar platforms. 

35. Do you have experience in risk modeling? 

We would recommend a similar approach to experience-based questions, as discussed previously. You can either opt to discuss your experience or exhibit your practical knowledge with practical examples. Give stepwise insights into how you would go along if you faced the task of risk modeling. 

• Discuss the time when you made a quick decision to change the risk management strategy abruptly. 
• Enlighten us about your skill of ‘attention to detail.’ Did it ever prove relevant to your job profile in risk management? If yes, when? 
• What risk mitigation strategies did you use in your previous job role? 
• Help us understand how you will build a risk management system from scratch. 
• When did you or will you go forward with the decision to take a risk?
• Tell us about the challenges you faced in mitigating risks in the industry. 
• How do you quantify risk? 
• What are the daily roles and responsibilities of risk managers? 
• Tell us about yourself. 
• What is risk velocity or risk frequency? 
• What are the indicators of a solid risk report? 
• Tell us about your risk management experience in the industry you are applying to.

Learn from a course that has been designed to help you ace your PMP exam in the first attemp! Check out our PMP Certification Training Course today!

Risk managers are a necessity for every business. Hence, numerous roles at distinct career levels are available for risk managers: 

Risk Analyst 

They are concerned with performing deep research and analysis to identify the possible risks that can impact the company. Risk analysts protect the company's financial, operational, and reputational image. They can work in distinct fields like credit or finances , market analysis and regulatory departments. 

Risk Manager 

Risk managers receive deeply researched information and make decisions based on their knowledge, experience, and skills. They also curate management approaches to avert or minimize possible risks. 

Loss Control Representative 

Concerned with the insurance sector, the professionals perform assessments to understand the possible risks based on the property's existing conditions. They have to make on-site visits to collect the information used in issuing and renewing insurance policies. 

Claims Investigator 

The claims investigators work to determine the validity of claims made by individuals and companies on their insurance policies. They identify the damage and check the complainant's eligibility based on its intensity.  

Apart from becoming risk managers, professionals can also choose roles based on the level at which they wish to pursue a career. They can opt for leadership, seniority positions and support.

Risk management is experiencing emerging trends for advancement in predicting and handling potential risks. These trends include: 

• Utilization of ML and AI models and their types, such as generative AI in decision-making 
• The incorporation of enhanced connectivity and constant monitoring of services, products and business models helps to evaluate the risk and its intensity promptly 
• Researches into behavioral sciences allow other optimized perceptions of risk analysis and behavior 
• Emphasis on risk vigilance and resilience to minimize the losses 
• Utilization of risk transfer instruments such as financial instruments , contracts or insurance is also effective 

The risk manager is an important job profile in all major and significant companies. Although risk management has varying applications and technicalities in different fields and industries, the overall requirement is the prevention and minimization of risk. Understanding the intricacies of risk management and its application requires knowledge, practice and guidance from industry leaders. Simplilearn offers a complete package via Project Management Certification training . Gain the most from industry experts and job and interview assistance.

1. What are the 5 areas of risk management?

The five components of the risk management framework include risk identification, measurement and assessment, mitigation, reporting, monitoring and governance. 

2. What qualifications are essential for a risk manager? 

To become a risk manager, you must begin by enrolling in a business-related program followed by a master’s degree like MBA. It helps you gain familiarity with business prospects. Further, gain experience in the field through internships or entry-level positions to find your preferred area of interest in risk management. After gaining relevant experience, go on to apply to progress further in your career. 

3. How is risk management evolving with AI and machine learning? 

AI and ML are continuously being incorporated into risk management to enhance efficiency and productivity while decreasing company expenditure. It has enabled quick research, analysis and prediction followed by assistance in decision-making to take better strategies. 

4. What are some common mistakes in risk management interviews?

 The common mistakes witnessed in risk management interviews include: 

• Lack of preparation in terms of general and company-specific knowledge.
• Exhibiting overconfidence.
• Not indicating your capabilities and potential contribution that a candidate can make to the company’s progress.
• Dodging, exaggerating or minimizing the question.
• Focussing only on hard skills while ignoring soft skills.

Our Project Management Courses Duration And Fees

Project Management Courses typically range from a few weeks to several months, with fees varying based on program and institution.

Recommended Reads

An Introduction to Project Management: A Beginner’s Guide

The Basic Principles of Project Management

What is Agile Project Management?

Project Management Interview Guide

PMP Study: 3 Types of Contracts in Project Management

What Is Project Management?

Get Affiliated Certifications with Live Class programs

• PMP, PMI, PMBOK, CAPM, PgMP, PfMP, ACP, PBA, RMP, SP, and OPM3 are registered marks of the Project Management Institute, Inc.

• How it works
• Case studies

13 case studies on how risk managers are assessing their risk culture

Continuing on from last week's post, There’s no such thing as risk culture, or is there? , this is the third in a series of blogs in which we are summarising key insights gained from about 50 risk managers and CROs interviewed between December 2019 and May 2020.

There are various techniques and different mindsets on how to assess and measure risk culture. We round-up the very best case studies, tools and templates used by risk managers around the world.

To survey or not to survey?

If you start from a base of assuming you need a survey (or perhaps you have an executive or board who want one), then you are faced with two main choices:

• Include a number of questions in a larger employee engagement/culture survey, probably being run by HR (as one of our Member organisations did, only to discover the results didn’t align with their anecdotal feedback and experiences)
• Conduct a dedicated risk culture survey, which might later be re-run as a benchmark (as one former CRO at an international airline did upon joining the organisation).

However, not everyone believes a survey is the way to go. Or at least, not a survey in isolation.

It’s a self-assessment tool, for one thing, as former Bank of Queensland CRO Peter Deans pointed out in a recent Intelligence contribution (Members: access this here ). You may not get the true risk picture you need, if you are only asking people if they believe they are making risk-aware decisions and are satisfied with the culture.

UK risk consultant Roger Noon shared with us a variety of tools risk managers can use in-house to help understand behaviours and diagnose culture (Members: access these tools here) . Of quantitative risk culture surveys, he says: “Survey instruments can also be used so long as you and your sponsors recognise that they are typically very blunt tools, often with poor validity. They're very ‘point in time and context’ driven, and they don't really provide you with objective observable output. 

“However, they can be used to generate interesting data that creates helpful dialogue at the senior management table. They’re also useful to build engagement with the people that are part of the culture, and as part of a wider, triangulated set of data.”

In other instances, risk managers found it was not employees they initially needed to survey, but their board. Across different industries, different understandings of risk culture exist. If your board is asking about risk culture, it can be a good idea to check in that you (and they, among themselves) are all on the same page before beginning any broader projects. (Members: take a look at some sample questions about risk culture for the board here .)

So overt it’s covert

When it comes to an organisation’s overall approach to assessing and changing risk culture, there are also a few fundamentally different mindsets.

For some companies, the ‘culture overhaul’ needs to be a large project with lots of publicity and a big push from the top. In such cases, when it comes to driving change, extensive engagement and communications programs are planned, potentially including video.

We collected one case study, however, that stood out for its far more subtle and positive approach. In it, the head of risk at a large organisation with a few thousand staff spread across nine departments said there were a lot of preconceptions and quite a bit of nervousness around the idea of ‘working on risk culture’. This risk manager had therefore developed a different kind of self-assessment tool, which helped participants map their own risk culture using evidence-based attributes. 

At the end of the initial meeting (which took no more than an hour and a half), participants had identified their own areas for improvement and incorporated culture elements into their future risk planning. (Members: access this case study here .)

Sometimes risk managers reach a point where they simply have to be realistic about their resources and prospects for implementing large scale change.

In another example from the Middle East, an expat risk manager found it was a case of trying to move his company’s risk culture at different ‘clock speeds’ across the organisation’s verticals, catering to different levels of appetite, awareness and need for change between delivery teams and the C-Suite. (Members: access this case study here .)

And, finally, sometimes risk managers reach a point where they simply have to be realistic about their resources and prospects for implementing large scale change. If there’s no appetite from the top for a risk culture shift, the risk manager will have an uphill battle. We’ve collected ideas from the former risk leader at a government utility, who devised tactics for embedding changes into existing systems and processes to deliver better risk outcomes for the business. (Members: access these ideas here .)

Measuring, reporting and dashboards

We found that the facet of culture where everybody most wanted to know what everybody else was measuring and what they were doing in terms of reporting and dashboards.

Again, there were a number of different methods shared by our Members and contributors, as well as contrasting views on what actually should be measured.

For example, is it redundant to actually measure ‘risk culture’? After all, isn’t the entire point of improving risk culture to improve risk outcomes? Why not just focus on measuring the risk outcomes, with culture change happening in the background to facilitate? 

Certainly, this was the view of the former risk manager at a prominent United States government organisation, who spoke to us about building up their organisation’s risk capability over several years. (Members: read more on this here .)

Is it redundant to actually measure ‘risk culture’? After all, isn’t the entire point of improving risk culture to improve risk outcomes?

However, others saw value in tracking specific culture metrics, even if these goals were a means to an end. A scorecard or dashboard became a talking point to launch difficult conversations with different managers or executives, and the ability to show progress over time helped maintain momentum and commitment.

Over time, Peter Deans at BOQ developed and refined a ‘basket of risk culture measures’ along the same lines as the consumer price index, which he regularly updated and used to give leadership a ‘big picture view’ of how risk culture was doing.

Other contributing risk managers shared their scorecards and dashboards with us as templates, such as a scorecard example using a traffic light system across nine key risk indicators. We also collected ideas for dashboard metrics and a spreadsheet-based sunburst tool, alongside risk culture pillars.

On a final note, UK risk advisor Danny Wong shared a detailed case study on how to use data to drive an impactful risk narrative. For any risk managers who are striving to bring risk into line with many other functions in contemporary business – such as product development, sales, operations, and others that regularly use data strategically to inform decision making and best practice – this piece is essential reading. (Members: access this piece here .)

Risk Leadership Network’s Intelligence platform – our searchable database of peer-contributed case-studies, tools and templates – delves deeper into risk culture with more on diagnosing culture , addressing culture and ethics , and building a risk culture survey of boards . (Members only)

Are you an in-house risk manager who could benefit from collaborating with a global network of senior risk professionals talk to us about becoming a member today ., related posts you may be interested in.

There’s no such thing as risk culture, or is there?

5 ways to become a better leader in risk culture

Three useful tools to optimise a risk culture review

Get new posts by email.

Quick Links

• Official Directory
• Copyright 2024 ICAI.