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

A risk analyst at a bank is asked by her manager to revise a VaR report so that a large breach of the desk limit is not shown. The analyst believes the revision would mislead the bank's senior management. Under the GARP Code of Conduct, what is the most appropriate action?

She should decline to misrepresent the VaR results and escalate through appropriate internal channels. The GARP Code requires honesty and prohibits knowingly misrepresenting facts, and a manager's instruction does not override that duty. A private note would still leave senior management misled.

  1. AMake the revision, because the manager is responsible for the final report
  2. BMake the revision but add a private note in her own files
  3. CDecline to misrepresent the results and escalate the matter through appropriate internal channelsCorrect
  4. DResign immediately without informing anyone at the bank

Explanation

The Code requires members not to knowingly misrepresent facts and to act with honesty and integrity. Following a manager's instruction does not remove that duty. The analyst should refuse to alter the report and raise the issue through proper channels. Keeping a private note still leaves senior management misled.

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