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FRM Exam Part I · GARP Code of Conduct

GARP Code of Conduct: Overview and Purpose for FRM Part I

Updated 11 October 2026 · Fact-checked

The GARP Code of Conduct is a set of ethical standards that sets out how risk professionals should behave. It applies to GARP members and to FRM candidates. It covers principles, professional standards and rules of conduct. To answer exam questions, identify who is bound, then match the facts to the principle.

Understand GARP Code of Conduct Overview and Purpose

The GARP Code of Conduct is GARP's statement of the ethical behavior it expects from risk professionals. Risk managers advise firms, regulators and clients, and they handle sensitive information. Trust in the profession depends on honest, competent and independent work. The Code exists to protect that trust.

The Code applies to GARP members and to FRM candidates, including anyone who registers for or sits the exam. Holders of the FRM designation are also bound as members. It is not only for senior staff. You are covered from the moment you register as a candidate.

The Code is organized in layers. It begins with broad principles such as professional integrity and ethical conduct, conflicts of interest and confidentiality, and fundamental responsibilities. Under these sit more specific standards and rules of conduct that describe what you must or must not do. Learn the principles first, then the rules as applications of them.

The Code works alongside the law, not instead of it. Where local law or your employer's policy is stricter, you follow the stricter standard. Where the Code is stricter, you still follow the Code. Breaching it can lead to disciplinary action by GARP, which may affect membership or certification.

For the exam, expect short scenario questions. You are asked whether a person is bound by the Code, which principle is engaged, or what the proper action is. The reasoning is judgment, not calculation.

How to solve GARP Code of Conduct Overview and Purpose questions

Use the same short routine on any Code of Conduct question. It keeps you from choosing an answer that merely sounds ethical.

  1. 1Read the scenario and identify who the person is: GARP member, FRM candidate, or neither.
  2. 2Decide whether the Code applies to that person's conduct.
  3. 3Identify the facts that raise an ethical issue, such as misuse of information, a conflict, misrepresentation or exam misconduct.
  4. 4Match the issue to the broad principle: integrity and ethical conduct, conflicts and confidentiality, or fundamental responsibilities.
  5. 5Apply the stricter standard if law, employer policy and the Code differ.
  6. 6Choose the option that is honest, transparent, protects confidential information and follows the rules, even if it is less convenient.

Quickest way: Who, what, which principle

When to use it: Use this when you have about a minute per question and the options all sound reasonable.

  1. Who: member or candidate means the Code applies.
  2. What: spot the conduct that is questionable.
  3. Which: label it integrity, conflict or confidentiality, or responsibility.
  4. Eliminate options that hide, delay or minimize the issue, or that rely only on local law being weaker.
  5. Pick the option showing disclosure, honesty and compliance.

Common mistakes in GARP Code of Conduct Overview and Purpose

  • Thinking the Code applies only to certified FRM holders.

    Candidates assume ethics duties start after certification.

    Fix: Remember it covers GARP members and FRM candidates, including those who have only registered or sat the exam.

  • Treating the Code as a replacement for law.

    Both deal with proper conduct, so they seem interchangeable.

    Fix: Treat them as working together. Follow the stricter standard when they differ.

  • Choosing an answer because it protects the employer or client, even if it breaks the Code.

    Loyalty feels ethical.

    Fix: Integrity and the rules of conduct come first. Loyalty never justifies misrepresentation or breach of confidentiality.

  • Memorizing rules without knowing the principles.

    Lists feel easier to learn than ideas.

    Fix: Group each rule under a principle so you can reason about unfamiliar scenarios.

  • Assuming a breach must be intentional to matter.

    Ethics is linked with bad intent in everyday thinking.

    Fix: Careless or unintended conduct, such as sloppy handling of confidential data, can still fall short of the Code.

Worked examples

Example 1

Priya has registered for FRM Part I but has not yet sat the exam. She works as a credit analyst at a bank. Is she bound by the GARP Code of Conduct?
A. No, only certified FRM holders are bound
B. Yes, because FRM candidates are covered
C. No, only senior risk managers are bound
D. Yes, but only on exam day

Show the solution
  1. Identify the person: an FRM candidate, not yet certified.
  2. Recall the scope: the Code applies to GARP members and FRM candidates.
  3. Check A: wrong, because candidates are included.
  4. Check C: wrong, because seniority is irrelevant.
  5. Check D: wrong, because coverage is not limited to exam day.

Answer: B. Priya is bound as an FRM candidate.

Example 2

A risk analyst, a GARP member, learns that her firm's internal policy on disclosing a conflict is looser than the Code, and local law is silent. What should she do?
A. Follow the firm's looser policy because the employer sets the rules
B. Ignore the matter because the law is silent
C. Follow the stricter standard in the Code and disclose
D. Wait until a regulator asks

Show the solution
  1. Identify who is bound: a GARP member, so the Code applies.
  2. Identify the issue: a conflict of interest, under the conflicts and confidentiality principle.
  3. Compare standards: firm policy is looser, law is silent, the Code is stricter.
  4. Apply the rule: follow the stricter standard.
  5. Reject A, B and D, because each relies on a weaker standard or delays disclosure.

Answer: C. She follows the Code's stricter standard and discloses the conflict.

Exam tips

  • Questions are scenario-based and test judgment, so read for who is involved before reading the options.
  • Learn the three broad principles and be able to sort any fact pattern into one of them.
  • When options differ in strictness, the stricter and more transparent one is usually the intended answer.
  • Do not spend long here. These are quick marks if your framework is clear.
  • Remember scope: members and candidates, not only certificate holders.

Practice questions from GARP Code of Conduct

GARP Code of Conduct Overview and Purpose in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

GARP Code of Conduct Overview and Purpose: frequently asked questions

Who does the GARP Code of Conduct apply to?

It applies to GARP members and FRM candidates. That includes people who have registered for the exam, not only those who have passed.

What is the purpose of the GARP Code of Conduct?

Its purpose is to set ethical standards for risk professionals so that the profession keeps the trust of employers, clients, regulators and the public.

Is the Code of Conduct tested in FRM Part I?

It is part of the Foundations of Risk Management material, so questions can appear. GARP revises the curriculum every year, so check the current Study Guide and Learning Objectives.

What happens if someone breaches the Code?

A breach can lead to disciplinary action by GARP, which may affect membership or the FRM designation or candidacy. Read GARP's current published procedures for details.