FRM Part I · FRM Exam Part I · GARP Code of Conduct
A risk officer discovers that a fellow GARP member in her firm has been submitting model back-testing results that omit several exceptions. The member says it was an honest oversight and has since corrected the internal file, but a regulatory filing already made still contains the omission. Which action best reflects the officer's obligations under the GARP Code of Conduct?
She should ensure the issue is raised through appropriate channels so the misleading regulatory filing is corrected. The GARP Code bars members from condoning misrepresentation, and fixing only the internal file leaves regulators misled. Relying solely on the colleague, or doing nothing, would not remedy the problem.
- ATake no action, since the internal file has been corrected
- BInform the colleague only, and rely on him to decide whether to correct the filing
- CReport the colleague to GARP before speaking to anyone at the firm
- DEnsure the matter is raised through appropriate channels so the misleading filing can be corrected, as members should not condone misrepresentation by othersCorrect
Explanation
The Code requires members to act with integrity and not knowingly be party to misrepresentation, and to encourage ethical conduct by others. A misleading regulatory filing remains uncorrected, so internal correction is not enough. Raising it through appropriate channels addresses the filing. Leaving it to the colleague alone or going outside the firm first is not the proportionate step.
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