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

An FRM holder at a bank is offered an expensive all-expenses-paid trip by a software vendor shortly before the bank's model procurement decision, in which she is a voting member. Which action best fits the GARP Code of Conduct?

She should decline the trip, or disclose it to her employer and abstain from the vote. The GARP Code requires members to avoid or disclose situations that could compromise objectivity. Accepting secretly or voting against the vendor to compensate does not remove the conflict.

  1. AAccept the trip because the vendor is not yet selected
  2. BAccept the trip and vote against the vendor to show independence
  3. CAccept the trip but tell no one, since she will vote on merit
  4. DDecline the trip or disclose it to her employer and abstain, since it could impair her objectivityCorrect

Explanation

Gifts that could reasonably compromise objectivity create a conflict that must be avoided or disclosed. Declining, or disclosing and abstaining, protects independence. Voting against the vendor still reflects a distorted judgment, and secret acceptance is concealment.

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