Updated: May 31, 2026
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1. Which of the following was NOT a factor in the National Australia Bank case?
A) Improper or insufficient Board-level communication regarding the importance of risk management and oversight
B) Inadequate back office procedures
C) Money laundering using foreign exchange trades for political leaders
D) Rogue traders
2. 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) The risk manager has submitted the report to their direct supervisor and their obligation ends at this point, nothing further should be done
B) Escalation of the issue is against the Code of Conduct because one should respect the administrative structure of the organization
C) If the risk manager deems it appropriate, he / she should send a copy of the original report to the CEO
D) 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
3. A VaR model for managing market risk at Barings Bank in London would most likely have:
A) Not correctly assessed the risk in Nick Leeson's option trades as they have non-linear price characteristics
B) Alerted senior management to the problems before the major losses occurred
C) Been used if senior management had ever seen it
D) Helped very little as Nick Leeson hid many trades
4. The Fortress Re accounting risk transfer procedures
A) made it difficult for TFMI to determine whether risk had actually been transferred and whether it had sufficient catastrophe insurance cover
B) made it straightforward for TFMI to determine whether risk had actually been transferred and they decided not to take out more catastrophe insurance cover
C) made it difficult for TFMI to determine whether risk had actually been transferred so they had to take out additional catastrophe insurance cover
D) made it straightforward for TFMI to determine when the risk had been transferred and to take out additional catastrophe insurance cover
5. As a PRMIA member, you have certain responsibilities. Among these are the requirement(s) to:
A) Vote in Board elections
B) Adhere to the PRMIA Standards of Best Practice, Conduct and Ethics
C) All of the above
D) Attend at least one PRMIA chapter meeting per year
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: D | Question # 3 Answer: D | Question # 4 Answer: A | Question # 5 Answer: B |
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