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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 recent limit breach is not visible to the board. Under the GARP Code of Conduct, what is the most appropriate action for the analyst?

The analyst should refuse to misrepresent the limit breach and escalate internally. The GARP Code prohibits knowingly misrepresenting facts or participating in misrepresentation, and an instruction from a manager does not excuse a breach of professional integrity.

  1. AMake the change, since the manager bears responsibility for the report's content
  2. BDecline to misrepresent the information and escalate the matter through appropriate internal channelsCorrect
  3. CMake the change but add a private note to her own files
  4. DResign immediately without informing anyone at the firm

Explanation

The Code requires members to act with honesty and integrity and not knowingly misrepresent facts or participate in misrepresentation. Following a superior's instruction is not a defense. Escalating internally is consistent with the Code, whereas complying while keeping a private note still involves participating in the misrepresentation.

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