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FRM Part I · FRM Exam Part I · GARP Code of Conduct

A GARP member is asked by an employer to sign off on a risk report prepared with a methodology that the member believes does not comply with the applicable regulatory rules. Which action best reflects the Code's requirement regarding applicable laws and rules?

She should decline to sign off and escalate the issue. The Code requires compliance with applicable laws and rules, and where the law and the Code differ, the stricter standard governs. Employer approval, a private file note, or common industry practice does not excuse knowingly endorsing a noncompliant report.

  1. ASign off, because the employer has approved the methodology
  2. BSign off but add a private note in her own files
  3. CDecline to sign off and, where the stricter standard applies, comply with the more strict of the law or the Code, escalating appropriatelyCorrect
  4. DSign off if the methodology is widely used in the industry

Explanation

Members must comply with applicable laws and regulations, and where the Code and the law differ, follow the stricter. Knowingly endorsing a noncompliant report would breach this. A private note or industry prevalence does not remedy it.

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