FRM Part I · FRM Exam Part I · GARP Code of Conduct
A risk analyst at a bank learns that a senior colleague has been backdating risk-limit approval forms to hide breaches. Under the GARP Code of Conduct, which action is most consistent with the analyst's obligations?
The analyst should report the backdating through the firm's proper internal channels and refuse to take part in it. The Code requires integrity and no knowing misrepresentation of facts. Staying silent or accepting a private promise leaves the misleading records in place and fails the analyst's ethical duties.
- AIgnore the matter because the colleague is more senior and responsible for the forms
- BRaise the matter through the firm's appropriate internal reporting channels and avoid participating in the misrepresentationCorrect
- CConfront the colleague privately and take no further action if the colleague promises to stop
- DWait until the regulator audits the bank before disclosing anything
Explanation
The Code requires members to act with integrity, not knowingly misrepresent facts, and to comply with applicable rules and ethical standards. Reporting through proper channels and refusing to take part in the misrepresentation fits these duties. Relying on a private promise leaves the misrepresentation uncorrected, so it is inadequate.
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