Can you give an example of a time when you identified a potential risk in a financial document?

Underwriting Analyst Interview Questions

Sample answer to the question

One example of a time when I identified a potential risk in a financial document was during my internship at a financial services company. I was assigned to review a client's financial statements as part of the underwriting process. While analyzing the statements, I noticed discrepancies in the revenue figures for the past two years. After further investigation, I discovered that the client had incorrectly recorded sales transactions, which inflated their revenue. This raised a red flag, as it indicated potential financial misrepresentation. I immediately brought this to the attention of my supervisor and provided a detailed report outlining the discrepancies. As a result, the underwriting team decided to conduct a more thorough assessment of the client's financials and ultimately rejected the application for insurance cover. This experience taught me the importance of meticulous attention to detail in financial analysis and the significance of identifying potential risks.

A more solid answer

During my internship at a financial services company, I was responsible for reviewing financial documents as part of the underwriting process. In one instance, while analyzing a client's financial statements, I noticed inconsistencies in the revenue figures for the past two years. This immediately caught my attention, and I decided to dig deeper to understand the root cause. Through my detailed analysis, I discovered that the client had inaccurately recorded certain sales transactions, leading to an inflated revenue figure. I promptly brought this to the attention of my supervisor, providing a clear and concise report outlining the discrepancies and potential risk of financial misrepresentation. As a result, the underwriting team conducted a thorough assessment of the client's financials, which corroborated my findings. Ultimately, the application for insurance cover was rejected due to the identified risks. This experience showcased my analytical thinking, attention to detail, risk assessment abilities, and financial acumen.

Why this is a more solid answer:

The solid answer provides a more comprehensive description of the candidate's actions and the outcome of the situation. It includes specific details on how the candidate identified and addressed the potential risk, as well as the impact of their actions on the underwriting decision. The evaluation areas mentioned are addressed with concrete examples, demonstrating the candidate's skills in those areas. However, the answer could still be improved by providing more specific details on the candidate's data analysis techniques and the financial implications of the identified risk.

An exceptional answer

During my internship at a financial services company, I encountered a situation that required me to identify a potential risk in a financial document. I was assigned to review the financial statements of a client who was applying for insurance cover. As I meticulously analyzed the statements, I noticed a discrepancy in the accounts receivable turnover ratio, which indicated potential issues with the client's creditworthiness. This raised concerns about the client's ability to meet their financial obligations and posed a risk to the insurance company. To further investigate, I requested additional documentation from the client and conducted a thorough analysis of their payment history and credit reports. Through this process, I discovered a pattern of delayed payments and a high level of outstanding debts owed by the client. I immediately alerted my supervisor and provided a detailed report outlining the findings and the potential risks associated with accepting the application. My analysis enabled the underwriting team to make an informed decision to reject the application, mitigating potential losses for the company. This experience highlighted my exceptional analytical thinking, attention to detail, risk assessment skills, and financial acumen, showcasing my ability to identify and address potential risks effectively.

Why this is an exceptional answer:

The exceptional answer goes above and beyond by providing more specific details on the candidate's data analysis techniques, such as analyzing the accounts receivable turnover ratio and conducting in-depth investigations into the client's creditworthiness. The answer also explores the candidate's ability to assess the financial implications of the identified risk, such as delayed payments and outstanding debts. The evaluation areas mentioned are strongly addressed with concrete examples, demonstrating the candidate's exceptional skills in those areas. However, the answer could still be improved by discussing the candidate's ability to collaborate with the underwriting team and communicate their findings effectively. Additionally, providing specific quantitative measures of the potential losses mitigated would further enhance the answer.

How to prepare for this question

Familiarize yourself with financial documents and statements commonly used in underwriting processes, such as balance sheets, income statements, and cash flow statements.
Develop strong analytical and mathematical skills, as these are crucial for identifying potential risks in financial documents.
Practice analyzing financial statements and credit reports to identify inconsistencies and red flags.
Stay updated on industry trends and regulations that may impact the underwriting process and risk assessment.
Enhance your attention to detail by practicing thorough and meticulous analysis of financial documents.
Improve your data analysis skills, particularly in Excel and other data analysis tools commonly used in underwriting.
Develop strong written and oral communication skills to effectively communicate your findings and recommendations to the underwriting team.

What interviewers are evaluating

Analytical thinking
Attention to detail
Risk assessment
Financial acumen