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

An FRM candidate working as a risk analyst at a bank learns that her manager's brother holds a large personal position in a company whose credit exposure she is reviewing. She has no personal stake herself. Under the GARP Code of Conduct, what is the most appropriate action?

She should disclose the relationship to the appropriate parties. The GARP Code requires members to make known actual or potential conflicts that could reasonably impair objectivity, so that they can be managed transparently, rather than ignoring them or distorting the work.

  1. AComplete the review quietly, since she herself has no financial interest
  2. BDisclose the relationship to the appropriate parties so the potential conflict can be managedCorrect
  3. CReduce the exposure rating to avoid any appearance of bias
  4. DDecline to document the review so no one questions the outcome

Explanation

The Code requires members to disclose, or otherwise make known, any actual or potential conflicts of interest that could reasonably impair objectivity. Staying silent hides a relationship others might consider relevant. Altering the rating or leaving it undocumented are themselves improper and do not address the conflict.

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