CSM Professional Ethics & Governance 2 — Questions and Answers
Question 1: A strategic manager discovers that a colleague is sharing confidential merger plans with a competitor. Which ethical principle is being violated?
- Transparency
- Fiduciary duty and confidentiality (Correct answer)
- Stakeholder engagement
- Corporate social responsibility
Correct answer: Fiduciary duty and confidentiality
Sharing confidential merger plans violates fiduciary duty, which requires acting in the best interests of the organization and maintaining confidentiality of privileged information.
Question 2: In corporate governance, the 'tone at the top' principle refers to which of the following?
- The highest salary levels within an organization
- Leadership's communication style in board meetings
- The ethical culture and values modeled by senior leadership (Correct answer)
- The hierarchy of decision-making authority
Correct answer: The ethical culture and values modeled by senior leadership
Tone at the top refers to the ethical climate and culture that senior leaders establish through their behavior, decisions, and values, which cascades throughout the organization.
Question 3: Which governance mechanism is specifically designed to prevent a single individual from having unchecked authority over critical decisions?
- Performance appraisals
- Segregation of duties (Correct answer)
- Strategic planning cycles
- Employee engagement surveys
Correct answer: Segregation of duties
Segregation of duties divides critical tasks among multiple individuals to reduce the risk of error or fraud by ensuring no single person controls an entire process.
Question 4: A CSM practitioner is asked to present overly optimistic projections to secure investor funding. The ethical response is to:
- Present the optimistic figures to meet business goals
- Refuse to participate and report the request to compliance (Correct answer)
- Adjust figures slightly to remain defensible
- Delay the presentation until better data is available
Correct answer: Refuse to participate and report the request to compliance
Presenting knowingly misleading projections to investors constitutes fraud; the ethical response is to refuse and escalate to compliance or legal counsel.
Question 5: The concept of 'duty of care' in strategic governance requires board members to:
- Maximize short-term shareholder returns at all costs
- Make informed decisions with reasonable diligence (Correct answer)
- Defer all decisions to the CEO
- Avoid involvement in operational matters
Correct answer: Make informed decisions with reasonable diligence
Duty of care obligates board members to act with the diligence, care, and skill that a reasonably prudent person would exercise when making decisions on behalf of the organization.
Question 6: Which of the following best describes a whistleblower protection policy in an ethical governance framework?
- A policy restricting employees from speaking to media
- Protection for employees who report misconduct in good faith (Correct answer)
- A reward system for identifying inefficiencies
- A policy requiring prior approval before raising concerns
Correct answer: Protection for employees who report misconduct in good faith
Whistleblower protection policies shield employees who report suspected wrongdoing in good faith from retaliation, encouraging ethical transparency.
Question 7: In ethics frameworks, 'normative ethics' is primarily concerned with:
- Describing how people actually behave in organizations
- Establishing what actions are morally right or wrong (Correct answer)
- Measuring the financial impact of ethical decisions
- Analyzing past ethical failures in corporations
Correct answer: Establishing what actions are morally right or wrong
Normative ethics focuses on establishing standards and principles that prescribe how individuals and organizations ought to act morally.
CSM Professional Ethics & Governance 2
A strategic manager discovers that a colleague is sharing confidential merger plans with a competitor.
Which ethical principle is being violated?