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

A risk manager believes a colleague, also a GARP member, has been manipulating stress test inputs to keep capital ratios above a regulatory minimum. The manager has seen documents but not confirmed intent. Under the GARP Code of Conduct, which course of action is best?

The manager should report the concern through appropriate internal channels and cooperate with any review, avoiding unsupported accusations. This honors the Code's integrity and non-condonement of misrepresentation while preserving confidentiality, unlike inaction, public confrontation or leaking documents to the press.

  1. ATake no action until intent is proven, because accusations without proof violate the Code
  2. BConfront the colleague publicly in a team meeting to force a correction
  3. CReport the concern through appropriate internal channels and cooperate with any review, without making unsupported accusationsCorrect
  4. DLeak the documents to the press to ensure regulators learn of the matter quickly

Explanation

Members are expected to uphold integrity, not participate in or condone misrepresentation, and to cooperate with inquiries. Reporting through proper channels addresses the concern while respecting confidentiality and fairness. Waiting for proof ignores the duty, and leaking or public confrontation breaches confidentiality and professionalism.

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