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

A risk manager is asked by her employer to present a report to the board that omits a limit breach, because the breach might 'cause unnecessary alarm.' Which statement best reflects the requirement under the GARP Code of Conduct?

She must not knowingly omit the limit breach and should escalate the instruction. The GARP Code prohibits misrepresenting or leaving out facts relevant to risk, and neither a supervisor accepting responsibility nor a generic disclaimer cures that duty.

  1. AShe may omit it if her supervisor accepts responsibility for the decision
  2. BShe may omit it if the breach is below a size she considers material to her own bonus
  3. CShe must not knowingly misrepresent or omit facts relevant to risk, and should escalate the instructionCorrect
  4. DShe may omit it if she adds a general disclaimer on model uncertainty

Explanation

Members must not knowingly misrepresent facts or omit information relevant to risk assessments. Supervisor responsibility, a disclaimer or personal bonus considerations do not remove the duty of honest and complete disclosure.

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