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Answer: Yes, this is a violation of the GARP Code of Conduct.
## Explanation Yes, this is a violation of the GARP Code of Conduct. As a GARP member and risk management professional, Junaid Manzoor has an ethical obligation to: - **Maintain professional competence** - This includes staying current with developments in risk measurement methodologies - **Exercise due diligence** - Professionals must ensure they are using appropriate and current methods - **Avoid negligence** - Using outdated methodologies that are no longer considered valid internationally constitutes professional negligence **Key Points:** - Ignorance of changes in professional standards is not a valid defense - GARP members are expected to maintain current knowledge in their field - The fact that neither Manzoor nor the firm was aware of the changes does not excuse the violation - Professional standards require ongoing education and awareness of industry best practices This violates Principle 2 (Professional Integrity) and Principle 3 (Professional Competence) of the GARP Code of Conduct.
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Junaid Manzoor has been hired as head of risk management by KDB Asset Management, a small investment firm in Pakistan. Manzoor implements a risk measurement framework to gauge portfolio risk for the firm. Unfortunately, the methodology he implements for risk measurement has changed considerably in recent years and is no longer used internationally. Neither Manzoor nor anyone else at the firm is aware of the changes to risk measurement approaches. As a GARP member, has Junaid violated the GARP Code of Conduct?
A
No, this is not a violation of the GARP Code of Conduct because neither Manzoor nor the firm is aware of the changes to risk measurement approaches.
B
No, this is not a violation as the methodology worked when Manzoor took his FRM exams.
C
This is only a violation of the GARP Code of Conduct if investment decisions are made based on Manzoor's risk reports.
D
Yes, this is a violation of the GARP Code of Conduct.
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