Financial Risk Manager Part 1
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Romney Muriuki, FRM, works as an analyst for an African Insurance firm that has a presence in 8 central African countries. In a recent report, Muriuki makes the following statements:
"Based on the fact that the firm has recorded steady growth in customer numbers over the last decade, and that the insurance penetration currently stands at 3%, I expect the trend to continue for the next 10 years. I also expect that the company will be able to translate the continually increasing revenue into significant profits."
The report describes in detail the risks facing the firm, particularly geopolitical risks associated with African countries. Muriuki's report:
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TTanishq
Explanation:
Muriuki's report did not violate the Code of Conduct. The Code of Conduct in question here is likely referring to a professional standard that requires analysts to clearly distinguish between factual information and their own opinions in their reports. In Muriuki's report, he presents the historical growth of the firm and the current insurance penetration rate as facts, which they are since they are based on actual data and events that have occurred. His projection of continued growth and profitability is presented as an expectation — i.e., his opinion — and thus does not constitute a violation. While the report acknowledges geopolitical risks, the omission of detailed risk analysis does not necessarily breach the Code unless it materially misleads or omits critical information required for sound decision-making — which is not indicated here.
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