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

A risk analyst at a bank learns that a colleague has been backdating risk reports to hide limit breaches. Under the GARP Code of Conduct, which action is most consistent with the analyst's fundamental responsibilities?

The analyst should report the backdating through the firm's appropriate channels and refuse to participate. The GARP Code requires integrity and no knowing misrepresentation, and members must not condone misconduct. Staying silent, waiting for an audit, or agreeing to secrecy would leave the false reporting in place.

  1. AIgnore the matter because the colleague is not a GARP member
  2. BReport the matter through the firm's appropriate channels and refuse to take part in the misconductCorrect
  3. CWait until the next audit to see whether the issue is discovered
  4. DConfront the colleague privately and agree to keep the matter confidential

Explanation

The Code requires members to act with integrity, not knowingly misrepresent facts, and to take appropriate action against misconduct. Escalating through proper channels and refusing to participate fits these duties. Private secrecy or waiting leaves the misrepresentation uncorrected.

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