Financial Risk Manager Part 1

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A certified FRM who is a risk manager at a multinational bank has been asked to explain the GARP Code of Conduct to several junior risk analysts. The manager uses several potential work-related scenarios to illustrate the Code of Conduct. Which of the following scenarios exemplifies behavior that complies with the standards of the GARP Code of Conduct?

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A wealth manager at the bank's asset management unit uses information from an investment analysis that utilized proprietary information to enter into a profitable trade on behalf of a client.

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A compliance officer working in a foreign office of the bank declines a request to take an action that is considered ethical in the bank's home country but not in the officer's local country.

42.3%

A model validator at the bank relies on the opinions of the quantitative analyst who developed the model to evaluate the soundness of the model during the validation process.

23.1%

A risk analyst at a bank analyzes a trade and concludes that losses will not exceed the trade's 10-day, 95% VaR limit; therefore, there is no risk of losses exceeding the VaR.

15.4%