FRM Part I · FRM Exam Part I · GARP Code of Conduct
A senior risk manager and GARP member discovers that her head of trading has been overriding VaR limit breaches by altering position valuations. She raised it internally twice, and management took no action. She believes continued inaction will mislead regulators in upcoming filings. Which course best aligns with the GARP Code of Conduct?
She should escalate to higher governance bodies like the audit or risk committee, refuse to participate in misleading filings, and consider legal reporting obligations. The Code bars knowing participation in misrepresentation, and silence or leaking to the press would breach integrity or confidentiality duties.
- ADo nothing further, since she has fulfilled her duty by raising it twice
- BResign quietly without comment to avoid being associated with the filing
- CEscalate to higher governance bodies such as the audit or risk committee, refuse to take part in misleading filings, and consider her legal duty to report to authoritiesCorrect
- DLeak the details to the press to force action
Explanation
The Code requires members to not knowingly participate in misrepresentation and to uphold applicable laws and integrity. Continued escalation and refusal to take part meet this. Stopping after two attempts or resigning silently leaves the misrepresentation uncorrected, and leaking breaches confidentiality and proper channels.
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