PRMIA 8004 Exam Syllabus Topics:
| Section | Objectives |
|---|---|
| Topic 1: Standards & Practices | - Standards of Best Practice, Conduct and Ethics, PRMIA Ethics Committee - Bylaws of Professional Risk Managers' International Association, PRMIA - Group of Thirty Best Practices, Global Derivatives Study Group - Principles of Good Governance Principles, PRMIA |
| Topic 2: Case Studies | - Silicon Valley Bank - Metallgesellschaft - American Insurance Group (AIG) - Bankers Trust - Lehman Brothers - FTX - Orange County - Barings - Operational Resilience at TSB - WorldCom - Northern Rock - National Australia Bank (NAB) - FX Options - Long Term Capital Management (LTCM) - Washington Mutual (Wamu) - Fannie Mae and Freddie Mac |
PRMIA PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics Sample Questions:
1. When local rules and regulations conflict with the PRMIA Standards of Best Practice, Conduct and Ethics the PRMIA member should ...
A) Seek advice from a qualified party, being mindful of legal and confidentiality requirements
B) Respect local rules and regulations
C) Modify the interpretation of local rules and regulations to meet the situation
D) Ignore local rules and regulations
2. When describing the reasons for the collapse of China Aviation Oil, which of the following was not cited?
A) No properly defined risk management policies in place and general lack of oversight by senior management
B) Senior management in China were aware of the positions but did not understand the complexities of risk managing them
C) Loss generating positions were rolled over by selling options on larger positions to generate cash premiums' to settle existing position losses
D) Time value was not taken into account during the contract valuation process
3. Which of the following is FALSE?
A) SIMEX made inquiries to Barings Bank about large margin calls on its positions
B) Nick Leeson dealt in complex derivatives lacking transparency of pricing
C) Nick Leeson also ran the back office for his trading area
D) Nick Leeson claimed to be running an arbitrage book
4. Corporate Governance ...
A) Eliminates risk to the greatest extent possible
B) Is defined as the assembled knowledge and wisdom of the collective stakeholders in the organization, set to maximize shareholder value
C) Is defined as that which is best practiced within an enterprise risk management framework, guided by the PRMIA Standards of Best Practice, Conduct and Ethics above all else
D) Is defined as business decision making predicated on a belief in potential rewards, balanced with the knowledge, understanding and appreciation of the risk taken to pursue those potential rewards
5. 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?
A) 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
B) Perform the assignment, noting in the final report the standards to which the assignment was done
C) Accept the assignment, and prior to doing any work, report the conflict of interest to the organization's compliance department
D) Accept the assignment, produce and deliver two reports according to both standards
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: B | Question # 3 Answer: B | Question # 4 Answer: D | Question # 5 Answer: A |
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