1. What is the primary purpose of the GARP Code of Conduct?
A. To outline the financial risk management techniques used in the industry.
B. To guide financial risk managers in maintaining high ethical behavior and professional integrity.
C. To focus only on legal responsibilities of financial risk managers.
D. To define the specific technical skills required for risk management certification.
The GARP Code of Conduct focuses on ethical behavior and professional integrity, guiding members in all situations related to the profession.
2. Which of the following areas does the GARP Code of Conduct specifically address?
A. Professional integrity, conflicts of interest, and confidentiality.
B. Only the technical skills necessary for risk management certifications.
C. Only legal requirements for financial risk managers in various countries.
D. Guidance on investment strategies and portfolio management.
The GARP Code of Conduct addresses professional integrity, conflicts of interest, and confidentiality to maintain high ethical standards in risk management.
3. What should a GARP Member do if they encounter a situation not specifically outlined in the Code of Conduct?
A. Ignore the situation and proceed without any action.
B. Consult a legal advisor before taking any action.
C. Follow the guidelines of the organization's internal policies.
D. Act in an ethical fashion and with prudence, even if the situation is not explicitly addressed in the Code.
When faced with situations not directly addressed by the Code, GARP Members are expected to act ethically and prudently to uphold the integrity of the profession.
4. What consequence can a GARP Member face for violating the Code of Conduct?
A. A formal warning but no further action.
B. A monetary fine without suspension from the certification program.
C. Suspension from the program or other disciplinary actions.
D. An increase in the certification fees to cover any violations.
Violating the Code of Conduct can result in suspension from the program or other disciplinary measures, ensuring that members adhere to ethical standards.
5. According to the GARP Code of Conduct, what is the primary responsibility of GARP Members with respect to professional integrity and ethical conduct?
A. To act professionally, ethically, and with integrity in all dealings with clients, employers, the public, and other practitioners.
B. To prioritize profitability in all professional dealings.
C. To only focus on their individual clients and ignore broader industry practices.
D. To only follow the local regulations, regardless of the industry norms.
GARP Members are expected to act with professionalism, integrity, and ethical behavior in all dealings with clients, employers, and the public.
6. What should GARP Members avoid in their professional activities to maintain independence and objectivity?
A. Accepting gifts and benefits from clients regardless of the value.
B. Offering, soliciting, or accepting gifts, benefits, or compensation that could compromise independence and objectivity.
C. Providing personal opinions without professional evaluation.
D. Ignoring conflicts of interest to maintain professional relationships.
GARP Members must avoid situations that could compromise their independence and objectivity, such as accepting gifts or compensation.
7. What is the responsibility of a GARP Member regarding the use of their services?
A. To allow their services to be used for fraudulent or illegal purposes if requested by a client.
B. To act solely based on the client’s wishes, regardless of ethical implications.
C. To take reasonable precautions to ensure that their services are not used for improper, fraudulent, or illegal purposes.
D. To follow the client's requests without questioning the ethicality of the tasks.
GARP Members must take reasonable precautions to ensure that their services are not used for illegal or fraudulent activities.
8. What action should a GARP Member take if they are involved in any dishonesty or act that reflects negatively on their integrity?
A. Immediately report the issue to the authorities without any delay.
B. Take steps to prevent any further actions that could harm their integrity or that of the profession.
C. Continue their activities and make no attempt to address the situation.
D. Ignore the situation as it is unlikely to affect their professional standing.
If a GARP Member is involved in dishonesty or actions reflecting negatively on their integrity, they must take corrective actions to protect the profession's reputation.
9. What should a GARP Member do when faced with cultural differences regarding ethical behavior?
A. Follow the local customs without concern for international standards.
B. Apply the local ethical behavior standards even if they conflict with global practices.
C. Only apply the highest standard if it aligns with personal beliefs.
D. Always seek to apply the highest ethical standard, even if it conflicts with local customs.
When faced with cultural differences, GARP Members should always apply the highest ethical standards to maintain the integrity of their profession.
10. What should GARP Members do in situations where a conflict of interest arises?
A. Ignore the conflict if it is minor and does not affect their duties.
B. Fully disclose any actual or potential conflict to all affected parties.
C. Try to conceal the conflict to avoid any negative consequences.
D. Seek approval from only their employer to handle the conflict.
GARP Members must act fairly and fully disclose any actual or potential conflict to all affected parties to ensure transparency.
11. What should GARP Members disclose to avoid impairing their independence and objectivity?
A. Any personal financial gains unrelated to their professional work.
B. All matters that could reasonably be expected to impair their independence, objectivity, or interfere with their duties to employers or clients.
C. Only conflicts of interest that occur during business meetings.
D. Disclose only the major conflicts that may harm the employer’s reputation.
GARP Members must fully disclose all matters that could impair independence and objectivity or interfere with their professional duties to clients and employers.
12. What must GARP Members do with confidential information?
A. Use the information for personal benefits as long as no one finds out.
B. Use confidential information only for business purposes with prior consent.
C. Share confidential information if it benefits the organization they work for.
D. Maintain confidentiality and not use confidential information for inappropriate purposes, unless prior consent has been obtained.
GARP Members must maintain the confidentiality of sensitive information and not use it for personal gain or inappropriate purposes without prior consent.
13. What is a GARP Member’s responsibility regarding the use of confidential information for personal benefit?
A. Use confidential information freely for personal financial gain as long as it does not affect clients.
B. Disclose confidential information to a third party to secure personal interests.
C. Not use confidential information for personal benefit in any form.
D. Use confidential information selectively if it benefits the organization they work for.
GARP Members must not use confidential information for personal benefit, ensuring that their professional conduct remains ethical and lawful.
14. What is the fundamental responsibility of GARP Members with respect to laws, rules, and regulations?
A. Comply only with the laws of their home country, disregarding international regulations.
B. Comply with all applicable laws, rules, and regulations and avoid participating in any violation.
C. Follow only internal organizational rules, as they override all external regulations.
D. Comply with laws only if their employer demands it.
GARP Members are required to comply with all applicable laws, rules, and regulations and cannot assist in any violations.
15. What is the ethical responsibility of GARP Members regarding delegation?
A. GARP Members can delegate their ethical responsibilities to others if they are too busy.
B. GARP Members must delegate their ethical responsibilities to supervisors for efficiency.
C. GARP Members cannot outsource or delegate their ethical responsibilities to others.
D. GARP Members should delegate all ethical decisions to external consultants.
GARP Members have ethical responsibilities that cannot be outsourced or delegated to others.
16. How should GARP Members approach the complexity and needs of their employer or client?
A. They should provide generic risk management services regardless of the specific needs.
B. They should only consider their personal knowledge and avoid tailoring services to clients.
C. They should understand the needs and complexity of their employer or client and provide appropriate risk management services and advice.
D. They should focus only on the legal aspects and avoid considering the client's needs.
GARP Members should understand the complexity of their employer or client's situation and offer tailored, appropriate risk management advice.
17. How should GARP Members handle the accuracy and certainty of their results?
A. Always overstate the certainty of the results to secure client approval.
B. Never provide any estimates; only provide facts.
C. Be diligent about not overstating the accuracy or certainty of results or conclusions.
D. Avoid discussing the limits of certainty when presenting results.
GARP Members must be careful not to overstate the accuracy or certainty of their results to maintain credibility and objectivity.
18. How should GARP Members present their knowledge and expertise?
A. Present their knowledge as if they are experts in all areas, even beyond their qualifications.
B. Always present an incomplete understanding of risk management.
C. Clearly disclose the relevant limits of their specific knowledge and expertise concerning risk assessment, industry practices, and applicable laws and regulations.
D. Focus only on areas where they are fully knowledgeable and ignore other aspects.
GARP Members should disclose the limits of their knowledge and expertise, ensuring transparency and avoiding overstatements.
19. What is expected of GARP Members regarding best practices in risk management?
A. Follow outdated risk management practices if they have been previously used in the industry.
B. Execute services with diligence, perform work independently from interested parties, and follow current generally accepted risk management practices.
C. Depend on external consultants for all risk management practices.
D. Focus solely on financial aspects and disregard other factors of risk management.
GARP Members should execute risk management services with diligence, adhering to current best practices while remaining independent.
20. How should GARP Members communicate risk-related information?
A. Communicate with exaggeration to make the risks appear more significant.
B. Provide opinions as facts without distinguishing them from actual data.
C. Ensure that communications include factual data and do not contain false information.
D. Focus on presenting only positive outcomes and avoid mentioning risks.
GARP Members should communicate risk-related information accurately, ensuring that all data is factual and free from falsehoods.
21. What happens if the GARP Code of Conduct conflicts with local laws and regulations?
A. The GARP Code of Conduct will override local laws and regulations.
B. Local laws and regulations will take priority over the GARP Code of Conduct.
C. Both the GARP Code of Conduct and local laws will be equally prioritized.
D. The conflict will be resolved by the local regulatory authorities alone.
If the GARP Code of Conduct conflicts with certain laws, the laws and regulations will take priority over the Code.
22. What are the potential consequences of violating the GARP Code of Conduct?
A. No consequences, as violations are considered non-serious.
B. Only a verbal warning will be issued for violations.
C. Violations may result in temporary suspension or permanent removal from GARP membership, or revocation of the right to use the FRM designation.
D. Violations will lead to automatic reinstatement after a specified period.
Violating the GARP Code of Conduct can lead to temporary suspension, permanent removal from GARP membership, or revocation of the FRM designation after a formal investigation.
23. What is the process for issuing sanctions for violations of the GARP Code of Conduct?
A. Sanctions are issued immediately without any formal investigation.
B. Sanctions are issued only if the violation is extremely severe.
C. Sanctions are issued after a formal investigation conducted by GARP.
D. Sanctions are not required; the member is given the chance to self-correct.
Sanctions for violations of the GARP Code are issued only after a formal investigation by GARP.
