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

An FRM holder is a risk consultant. She is offered a gift of substantial value by a vendor whose software she is evaluating for her employer. Her employer has no formal gift policy. Which statement best reflects her obligations under the GARP Code of Conduct?

She should decline the gift or at least disclose it beforehand, because it could reasonably impair independence or objectivity. The GARP Code requires avoiding or disclosing conflicts of interest regardless of whether an employer policy exists, and disclosure after the vendor decision is too late.

  1. AShe may accept it because no employer policy prohibits it
  2. BShe may accept it if she discloses it after the vendor is selected
  3. CShe may accept it if she believes her judgment will remain unaffected
  4. DShe should decline it or, at minimum, disclose it in advance, because it could reasonably compromise her independence or objectivityCorrect

Explanation

The Code requires members to avoid conflicts of interest and disclose those that cannot be avoided. Absence of a policy does not remove the duty. Self-assessment of unaffected judgment is insufficient, since appearance and reasonable perception matter, and disclosure after selection comes too late.

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