Financial Risk Manager Part 1
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Muhammad Aslam, FRM, is a risk analyst at Financial Angels, a venture capitalist firm that invests in tech and health science-related startups and small-medium enterprises (SMEs). After careful risk assessments, the manager has approved Aslam to initiate the first round of funding for seven startups. Aslam's wife co-founded one of the selected startups. Without disclosing this information, Aslam proceeded with the manager's recommendation. Determine if Muhammad Aslam's actions are in violation of a Code.
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A
No, because the recommendation of investing in seven startups, including the startup cofounded by Muhammad Aslam's wife, came from senior manager.
B
No, because the startup is founded by Muhammad Aslam's wife, not him. Therefore he can invest without disclosing this information.
C
Yes, as the Code requires a member to disclose to their employer the matters that could impair his independence and objectivity.
D
Yes, because Muhammad Aslam acted on the manager's recommendation without performing self-analysis.
Explanation:
Muhammad Aslam's actions are indeed in violation of the Code. The Code in question here is the Global Association of Risk Professionals' (GARP) Code of Conduct, which stipulates that members must disclose all matters that could potentially impair their independence and objectivity. In this case, Aslam's wife's co-founding of one of the startups selected for funding could be seen as a conflict of interest, which could impair Aslam's ability to objectively assess the risk and potential of the startup. By failing to disclose this information to his employer, Aslam has violated this Code. It is important to note that the Code is in place to ensure that all members act with the highest level of integrity, and any violation of the Code could lead to disciplinary action.
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