Exercise 1: Strategic Risk Identification and Assessment Prompt Engineering
Objective:
Learn to craft effective prompts for GenAI to identify and assess emerging strategic risks across the enterprise.
Background:
Chief Risk Officers are responsible for identifying, assessing, and managing risks that could impact the organization's strategic objectives. A key challenge is developing a comprehensive view of emerging risks across multiple domains.
Exercise:
1. Scenario:
You need to prepare a comprehensive analysis of emerging risks for an upcoming board presentation, covering multiple risk domains (credit, market, operational, strategic, cyber, regulatory).
2. Basic Prompt Example:
What are the top risks facing financial institutions today?3. Prompt Improvement Activity:
- Identify the limitations of the basic prompt (lack of specificity, context, and structure)
- Add details about your institution's profile and strategic priorities
- Include information about the current risk landscape and economic environment
- Request a structured analysis with specific risk scenarios and potential impacts
4. Advanced Prompt Template:
I am the Chief Risk Officer at a [size/type] financial institution preparing a comprehensive emerging risk analysis for our board of directors. Our institution has the following profile:
Institutional profile:
- Primary business lines: [e.g., retail banking, commercial lending, wealth management, etc.]
- Geographic footprint: [regions/countries]
- Asset size: approximately $[X] billion
- Strategic priorities: [e.g., digital transformation, expansion into new markets, cost efficiency]
- Current risk appetite: [conservative/moderate/aggressive in specific areas]
Current environment:
- Economic conditions: [brief description of current state and trends]
- Regulatory landscape: [key regulatory developments or focus areas]
- Competitive dynamics: [emerging competitive threats, industry consolidation]
- Technology trends: [relevant technological disruptions]
- Geopolitical factors: [relevant geopolitical tensions or developments]
Board presentation requirements:
- Comprehensive coverage across risk domains (credit, market, operational, strategic, cyber, regulatory)
- Forward-looking perspective (12-24 month horizon)
- Quantitative and qualitative risk assessments
- Potential impact on strategic objectives
- Recommended risk mitigation strategies
Please help me develop a comprehensive emerging risk analysis by:
1. Identifying the top 2-3 emerging risks in each of these domains:
- Credit risk: [specific to our portfolio composition]
- Market risk: [relevant to our balance sheet structure]
- Operational risk: [considering our business model and processes]
- Strategic risk: [in context of our strategic priorities]
- Cyber risk: [relevant to our digital footprint]
- Regulatory risk: [specific to our business activities]
2. For each identified risk:
- Provide a clear risk statement with potential triggers
- Assess potential impact (financial, reputational, strategic)
- Evaluate likelihood and velocity (how quickly it could materialize)
- Identify early warning indicators we should monitor
- Suggest potential risk mitigation strategies
- Describe interconnections with other risk domains
3. Recommend an approach for:
- Prioritizing these risks based on their potential impact and likelihood
- Integrating them into our enterprise risk management framework
- Developing appropriate risk appetite statements
- Communicating effectively to the board and senior management
- Establishing ongoing monitoring mechanisms
Format your response as a structured risk analysis that I can use to prepare a comprehensive board presentation on emerging risks.5. Evaluation Criteria:
- Does the prompt clearly describe the institutional profile and strategic context?
- Does it provide sufficient information about the current environment?
- Does it request specific risks across multiple domains with detailed analysis?
- Does it ask for practical mitigation strategies and monitoring approaches?
6. Practice Activity:
Create your own advanced prompt for strategic risk identification related to:
- A significant strategic initiative (e.g., digital transformation, merger/acquisition)
- A major economic shift (e.g., rising interest rates, recession)
- A changing competitive landscape (e.g., fintech disruption, new market entrants)
Exercise 2: Integrated Risk Reporting Prompt Engineering
Objective:
Develop skills to craft prompts that help create comprehensive, integrated risk reports that effectively communicate across multiple stakeholder groups.
Background:
Chief Risk Officers must communicate complex risk information to various stakeholders, including the board, regulators, and business leaders. A key challenge is creating clear, actionable risk reports that integrate insights across risk domains.
Exercise:
1. Scenario:
You need to develop an integrated risk report that provides a holistic view of the organization's risk profile for the board risk committee.
2. Basic Prompt Example:
Create a risk report for our board meeting.3. Prompt Improvement Activity:
- Identify the weaknesses in the basic prompt
- Add specificity about the report purpose and audience
- Include context about key risk areas and current concerns
- Request a structured report framework with specific components and visualizations
4. Advanced Prompt Template:
I am the Chief Risk Officer at a [size/type] financial institution preparing an integrated risk report for our quarterly Board Risk Committee meeting. This report needs to provide a holistic view of our risk profile across multiple domains.
Board Risk Committee profile:
- Composition: [e.g., 5 independent directors with backgrounds in banking, technology, and regulation]
- Risk expertise level: [e.g., sophisticated understanding of financial risks, less technical knowledge of cyber risks]
- Key concerns from previous meetings: [specific issues raised]
- Information preferences: [e.g., visual dashboards, executive summaries, detailed appendices]
Current risk landscape:
- Top enterprise risks: [list of 5-7 priority risks currently being monitored]
- Recent risk events: [internal incidents or external events affecting the industry]
- Risk appetite status: [areas approaching or exceeding thresholds]
- Emerging risk concerns: [newly identified or escalating risks]
- Regulatory focus areas: [current examination themes or regulatory priorities]
Report objectives:
- Provide a comprehensive, integrated view of enterprise risks
- Highlight significant changes in risk profile since last quarter
- Demonstrate effectiveness of risk management activities
- Support informed decision-making on strategic initiatives
- Meet regulatory expectations for board risk reporting
Please help me design a comprehensive integrated risk report by:
1. Outlining an effective report structure:
- Executive summary approach and key components
- Logical organization of risk domains
- Integration points to show risk interconnections
- Appropriate level of detail for board consumption
- Supporting materials and appendices
2. For each major risk category, recommend:
- Key metrics and indicators to include
- Trend analysis approaches
- Risk appetite alignment visualization
- Notable developments to highlight
- Forward-looking assessments
3. Suggesting effective data visualization approaches:
- Dashboard design for enterprise risk overview
- Heat maps or risk matrices for comparative assessment
- Trend charts for key risk indicators
- Scenario analysis results presentation
- Emerging risk visualization techniques
4. Providing communication strategies for:
- Explaining complex risk concepts to non-technical audience
- Highlighting areas requiring board attention or action
- Contextualizing risk information with strategic objectives
- Addressing potential board questions or concerns
- Demonstrating proactive risk management
Format your response as a comprehensive integrated risk report framework that balances thoroughness with clarity and actionability for a board audience.5. Evaluation Criteria:
- Does the prompt clearly describe the board audience and their information needs?
- Does it provide context about the current risk landscape and report objectives?
- Does it request specific report components and visualization approaches?
- Does it ask for communication strategies tailored to board-level discussions?
6. Practice Activity:
Create your own advanced prompt for integrated risk reporting related to:
- A special risk deep-dive on a critical risk area
- An annual comprehensive risk assessment for regulatory submission
- A risk report for a newly formed board committee with limited risk experience
Exercise 3: Risk-Based Decision Support Prompt Engineering
Objective:
Learn to craft prompts that help develop risk-based analyses to support strategic decision-making.
Background:
Chief Risk Officers must provide risk insights that inform strategic decisions. A key challenge is developing balanced risk analyses that consider both threats and opportunities while supporting business objectives.
Exercise:
1. Scenario:
You need to provide a risk-based analysis to support senior management's decision on a significant strategic initiative (e.g., new product launch, market expansion, acquisition).
2. Basic Prompt Example:
What are the risks of launching this new product?3. Prompt Improvement Activity:
- Identify the limitations of the basic prompt
- Add specificity about the strategic initiative and business objectives
- Include context about risk appetite and decision criteria
- Request a structured analysis that balances risks and opportunities
4. Advanced Prompt Template:
I am the Chief Risk Officer at a [size/type] financial institution providing risk-based decision support for [specific strategic initiative: e.g., launching a new digital lending platform, expanding into a new geographic market, acquiring a fintech company].
Strategic initiative details:
- Business objective: [specific goals and expected outcomes]
- Investment required: [approximate cost and resource commitment]
- Timeline: [implementation phases and key milestones]
- Strategic importance: [alignment with broader organizational strategy]
- Key stakeholders: [business units and functions involved]
Decision context:
- Decision deadline: [when final decision must be made]
- Alternative options being considered: [other approaches to achieve similar objectives]
- Key decision criteria: [factors influencing the decision]
- Current executive sentiment: [initial leanings or concerns]
- Similar past initiatives: [relevant historical experience]
Risk considerations:
- Current risk appetite: [relevant risk appetite statements or limits]
- Risk capacity: [ability to absorb additional risk]
- Regulatory considerations: [relevant requirements or constraints]
- Risk management capabilities: [strengths or gaps in managing new risks]
- Risk concentration concerns: [existing concentrations that could be affected]
Please help me develop a comprehensive risk-based decision support analysis by:
1. Providing a structured risk assessment framework:
- Key risk categories to evaluate for this initiative
- Risk identification methodology
- Risk quantification approaches where possible
- Qualitative assessment criteria for non-quantifiable risks
- Scenario analysis approach for different outcomes
2. For this specific initiative, analyze:
- Primary risks and their potential impacts
- Secondary and tertiary risk effects
- Potential opportunities and upside scenarios
- Risk interactions and compounding effects
- Time-based risk evolution (short, medium, long-term)
3. Recommending risk management strategies:
- Preventive controls to implement
- Detective controls to establish
- Risk transfer options to consider
- Risk acceptance parameters and governance
- Contingency plans for adverse scenarios
4. Suggesting a decision support approach:
- Risk-adjusted return analysis
- Go/no-go criteria from a risk perspective
- Phased implementation options to manage risk
- Key risk indicators to monitor if approved
- Post-implementation risk review methodology
Format your response as a balanced risk-based decision support analysis that neither advocates for nor against the initiative, but provides objective risk insights to inform sound decision-making.5. Evaluation Criteria:
- Does the prompt clearly describe the strategic initiative and business context?
- Does it articulate the decision parameters and risk considerations?
- Does it request a balanced analysis of both risks and opportunities?
- Does it ask for practical risk management strategies and decision support frameworks?
6. Practice Activity:
Create your own advanced prompt for risk-based decision support related to:
- A significant technology transformation initiative
- A new strategic partnership or joint venture
- A major change to business model or product strategy