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

A risk consultant, who is an FRM holder, is retained by Firm A to assess a counterparty. Midway, Firm A's competitor, Firm B, offers a separate paid engagement that would require using Firm A's confidential risk data. The consultant has not told either client about the other. Which response best satisfies the Code?

The consultant should not use Firm A's confidential data and should disclose the potential conflict before taking any Firm B work. The GARP Code requires protecting confidential information and disclosing conflicts of interest. Anonymizing or quietly switching clients still misuses the data or hides the conflict.

  1. AAccept Firm B's work and use the data, since the engagements are separate
  2. BAccept Firm B's work but anonymize the data without informing Firm A
  3. CDecline to use Firm A's confidential data, and disclose the potential conflict to relevant parties before proceeding with any Firm B workCorrect
  4. DResign from Firm A's engagement without telling anyone and take Firm B's work using the data

Explanation

The Code requires protecting client confidentiality and disclosing conflicts of interest that could impair objectivity. Using Firm A's data for Firm B breaches confidentiality, and anonymizing it secretly is still unauthorized use. Disclosure plus refusing to use the data satisfies both duties.

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