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

A risk manager at an asset manager is offered a free all-expenses-paid trip by a vendor whose risk-model software the firm is evaluating. Which response best follows the GARP Code of Conduct?

She should decline the trip or disclose it to her employer and get approval. The GARP Code bars benefits that could reasonably impair objectivity and requires timely disclosure of conflicts. Relabeling the trip, delegating the decision, or disclosing late does not cure the problem.

  1. AAccept it, provided the trip is described as educational and the final decision is made by someone else
  2. BAccept it and disclose it only if the vendor is selected
  3. CAccept it only if she personally pays for the flights and then evaluates the vendor as planned
  4. DDecline it, or disclose it to her employer and obtain approval, since it could reasonably impair her objectivityCorrect

Explanation

Members must not accept gifts or benefits that could reasonably be expected to compromise independence, and must disclose conflicts. Labeling the trip educational or delegating the decision does not remove the appearance of influence. Disclosure only after selection is too late. Paying only the flights still leaves the rest of the benefit.

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