Explanation

Answer Example

To minimize risk, I use a combination of thorough due diligence, collateral requirements, and continuous monitoring. I evaluate the firm’s leverage ratios, trading track records, and stress test their ability to withstand market volatility. For example, when approving a loan for a proprietary trading firm, I required collateral in the form of liquid assets, which reduced the risk of loss by 30% during a market dip. I also set margin call triggers to ensure early intervention in case of adverse conditions. This layered strategy ensures balanced risk management.