Skip to content

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

An FRM Candidate is a risk analyst at a bank. During a review she discovers that a senior colleague has been using a valuation model that she believes materially understates risk. Under the GARP Code of Conduct principle on professional integrity and ethical conduct, which action is most appropriate?

She should raise her concerns through the firm's appropriate channels and document them. The GARP Code requires integrity and sound professional judgment, so staying silent or waiting is inadequate, and going to the press would bypass proper escalation and risk breaching confidentiality obligations.

  1. AQuietly stop using the model herself and say nothing to anyone
  2. BRaise her concerns through the firm's appropriate channels and document themCorrect
  3. CReport the concern to the press to protect the public
  4. DWait until the next audit to see whether anyone else notices

Explanation

The Code requires members to act with integrity, exercise professional judgment and speak up about concerns through proper channels. Raising and documenting the issue internally meets this duty. Staying silent fails the duty, and going to the press bypasses internal escalation and may breach confidentiality.

Did you get it right without looking?

One question tells you little. A timed set on GARP Code of Conduct shows your real accuracy, how long you take and where you lose marks.

Practise GARP Code of ConductFree diagnostic mock

More GARP Code of Conduct questions