Preview Questions Risk Assessment Analyst | Role Specific Skill

Question 1: In a loan performance prediction model, what is the most important data transformation technique to use when the dataset contains outliers?

Which action should you take?

Choose only one option

Logarithmic transformation

Z-score normalization

Winsorization

Robust scaling

Question 2: Which reporting standard is most commonly followed for risk disclosures in BFSI?

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GAAP

SOX

IFRS 7

Basel III

Question 3: In risk assessment modeling, how would you handle missing values in a dataset containing client credit scores?

Which action should you take?

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Replace missing values with a random value within the dataset's range

Impute missing values using the mean, median, or mode

Use only complete cases without imputation or exclusion

Exclude the data points with missing values from analysis

Question 4: What does a contingency funding plan help mitigate in a bank's operations?

Which action should you take?

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Credit risk

Market risk

Operational risk

Liquidity risk

Question 5: How would you handle a dataset with both categorical and continuous variables when building a predictive risk model?

Which action should you take?

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By converting categorical variables to dummy variables

By normalizing continuous variables only

By using machine learning algorithms that can handle both types

By using a mixed-effects model

Question 6: In the documentation of credit risk assessments, what is the best way to ensure transparency when reporting the probability of default (PD)?

Which action should you take?

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Use generalized data without specifying sources

Only mention the final PD values without explaining the calculation

Include assumptions, data sources, and the methodology used to calculate PD

Exclude assumptions to focus on PD values