8009 PRMIA Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics

Exam IV: Case Studies: Standards: Governance, Best Practices and Ethics - 2015 Edition

Last Update 4 hours ago Total Questions : 110

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Question # 4

A PRMIA member is offered a highly paid work assignment on the condition that some aspects of assignment are not to be done according to PRMIA standards.

What should they do?

Perform the assignment, noting in the final report the standards to which the assignment was done

Accept the assignment, produce and deliver two reports according to both standards

Accept the assignment, and prior to doing any work, report the conflict of interest to the organization's compliance department

The PRMIA member should place the integrity of the risk management profession and users of risk management above their own personal interests, and refuse the work

Question # 5

According to PRMIA governance principles, boards and audit committees should …

Review compensation plans to ensure consistency with corporate risk appetite, competitive market conditions, and fiduciary responsibility to shareholders

Collectively assume responsibility of understanding and reporting the effectiveness of the firm risk management infrastructure

Be composed of key business unit representatives

Leave shareholder accountability to senior management who decides strategic direction

Question # 6

Which of the following is FALSE?

Nick Leeson also ran the back office for his trading area

Nick Leeson dealt in complex derivatives lacking transparency of pricing

SIMEX made inquiries to Barings Bank about large margin calls on its positions

Nick Leeson claimed to be running an arbitrage book

Question # 7

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

I, II and III only

I, III and IV only

I and III only

All of these are expected of the Financial Accounting and Reporting Infrastructure

Question # 8

The Fortress Re accounting risk transfer procedures

made it straightforward for TFMI to determine whether risk had actually been transferred and they decided not to take out more catastrophe insurance cover

made it difficult for TFMI to determine whether risk had actually been transferred so they had to take out additional catastrophe insurance cover

made it straightforward for TFMI to determine when the risk had been transferred and to take out additional catastrophe insurance cover

made it difficult for TFMI to determine whether risk had actually been transferred and whether it had sufficient catastrophe insurance cover