8004 Exam Dumps - PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics

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Question # 4

John Smith wants to run for election to the Board of Directors of PRMIA. To be nominated, he needs:

The backing of three other members

To go through a screening process conducted by the Nominations Committee

The backing of 6% of local members

The backing of five other members and to be serving on at least one PRMIA Committee

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Question # 5

TMFI's internal procedures and management were

fully aware of the uninsured risks Fortress Re were taking

absolutely unaware of their uninsured liabilities

aware that they had some uninsured liabilities but thought they had enough capital to withstand any uninsured losses

None of the above

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Question # 6

What is (are) the lesson(s) of the Barings' failure?

Incentive plans have risk management implications

Front and back offices need to be independent

Large profits can be an indicator of risk

All of the above

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Question # 7

Boards, including Audit and Risk Committees must:

I. Clearly articulate the corporate risk appetite to senior management

II. Thoroughly review compensation plans of potentially "highly compensated positions" for consistency with corporate risk appetite, competitive market conditions and fiduciary responsibility to shareholders

III. Have a single member formally given responsibility for understanding and reporting the effectiveness of the corporation's risk management infrastructure

IV. Be fully accountable to shareholders and work to the benefit of public good and financial stability

I and II only

I, II and IV only

I, II and III only

All of these are responsibilities of Board and Audit Committees

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Question # 8

A risk manager is asked to analyze the credit risk of a convertible bond. The risk manager has never analyzed convertible bonds, but does have significant expertise in credit risk. The risk manager accepts the assignment, finds a paper on the subject through the PRMIA web site and copies the method used there. The risk manager completes the assignment and delivers a report to his or her direct supervisor and the supervisor is quite pleased.

According to the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct), this was acceptable behavior if the following conditions were met:

I. The risk manager disclosed the lack of knowledge about convertible bonds

II. The methodology employed is disclosed and explained

III. The report was just to be used for analysis and not in practice

IV. The risk manager was sure of his/her understanding of the paper found on the web

I and II

I, II and IV

I, II and III

I only

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