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PRMIA 8009 Exam Syllabus Topics:
| Section | Weight | Objectives |
|---|---|---|
| PRMIA Standards of Best Practice, Conduct and Ethics | 30% | - Whistleblowing and Reporting Violations - Conflict of Interest and Disclosure - Code of Conduct and Professional Responsibilities - Ethical Decision-Making Framework |
| Corporate Governance Principles | 25% | - Transparency and Accountability - Board and Senior Management Oversight - Risk Governance Structure - PRMIA Governance Principles |
| Risk Management Case Studies | 25% | - Orange County - Northern Rock - Long-Term Capital Management (LTCM) - China Aviation Oil - Baring Bank - Metallgesellschaft |
| Risk Management Best Practices | 20% | - Enterprise Risk Management Framework - Compliance and Regulatory Alignment - Internal Controls and Risk Limits |
PRMIA Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition Sample Questions:
Question #1
A risk manager has just completed a risk assessment project. The report has been given to the risk manager's direct supervisor, who refuses to escalate the material issues raised in the report. Further, the direct supervisor edits the report to remove the section describing the material risk, who then submits it to the firm's Executive Committee.
According to the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct), which of the following actions is most appropriate:
A. If the risk manager deems it appropriate, he / she should send a copy of the original report to the CEO
B. Escalation of the issue is against the Code of Conduct because one should respect the administrative structure of the organization
C. The risk manager should attempt to resolve the conflict with the direct supervisor, but if that does not work, they should contact the Whistle-Blowing Hotline of the organization. If no such hot-line is in place, they should contact the PRMIA Ethics Committee
D. The risk manager has submitted the report to their direct supervisor and their obligation ends at this point, nothing further should be done
Question #2
The Financial Accounting and Reporting Infrastructure of any organization must:
I. Accurately represent the corporation's current and known financial condition in a timely manner II. Only use off-balance sheet transactions which have a legitimate economic, tax, risk transfer or risk mitigating purpose III. Provide a detailed description of the Risk Management Infrastructure in the organization's Annual Report to Shareholders IV. Provide an auditable Annual Statement of Compliance with the Board's publicly stated Standards of Corporate Governance to the Board and Audit Committee
A. I, III and IV only
B. All of these are expected of the Financial Accounting and Reporting Infrastructure
C. I, II and III only
D. I and III only
Question #3
Up until 2006, which of the following was not a primary driver for Washington Mutual's earning?
A. Complex derivative trades based on volatility indices.
B. Deposit taking activities which generated net interest income.
C. The provision of fee based services to its customers.
D. Lending to consumers and small businesses.
Question #4
Which of the following was not considered to be a positive outcome of the Northern Rock Case Study?
A. The role of the UK government and the possible underwriting of risks by tax-payers, and the general question of Moral Hazard
B. The original successful business model had not stress tested sufficiently for the incidence of Low Probability, High Impact incidents
C. It emphasised the importance of effective governance arrangements within financial firms
D. The reform of the Deposit Protection Scheme because of its internal inconsistencies
Question #5
Select the one correct statement relative to Barings Bank.
A. Proprietary and agency trading were combined and therefore did not increase risk.
B. Proprietary and agency trading were combined and therefore did increase risk.
C. Proprietary and agency trading were separate and did increase risk.
D. Proprietary and agency trading were separate and therefore did not increase risk.
Solutions:
| Question #1 Correct Answer: C | Question #2 Correct Answer: B | Question #3 Correct Answer: A | Question #4 Correct Answer: B | Question #5 Correct Answer: B |


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