RIMS Ethical Standards & Professional Conduct 3 — Questions and Answers
Question 1: A risk management professional is presenting risk findings to the board of directors. Ethical communication requires that the professional:
- Present only findings that support management's preferred strategy
- Omit highly technical details to avoid confusion
- Present complete, accurate findings including unfavorable information (Correct answer)
- Frame findings positively to maintain stakeholder confidence
Correct answer: Present complete, accurate findings including unfavorable information
Ethical standards demand honest and complete communication to decision-makers, including information that may be unwelcome or contradict preferences.
Question 2: The concept of 'duty of loyalty' in RIMS professional ethics primarily means:
- Always agreeing with employer decisions to maintain employment
- Acting in the best interest of the employer and clients within ethical bounds (Correct answer)
- Prioritizing the employer's interest over all regulatory requirements
- Remaining with a single employer throughout one's career
Correct answer: Acting in the best interest of the employer and clients within ethical bounds
Duty of loyalty means faithfully serving employer and client interests, but never at the expense of ethical or legal obligations.
Question 3: A risk manager who holds the ARM designation is asked to use that credential in marketing materials that exaggerate their risk management services. The ethical obligation is to:
- Allow the use since the credential is legitimately held
- Refuse and ensure credentials are not used in misleading representations (Correct answer)
- Use the credential only if a disclaimer is added
- Seek approval from RIMS before deciding
Correct answer: Refuse and ensure credentials are not used in misleading representations
Professional credentials must not be associated with false or misleading claims, as this violates the integrity and public trust requirements of the profession.
Question 4: Which scenario represents a clear violation of professional objectivity in risk management?
- Using quantitative models to assess risk severity
- Selecting an insurer owned by a family member without disclosure (Correct answer)
- Recommending a risk transfer strategy based on cost analysis
- Consulting with peers before finalizing a risk recommendation
Correct answer: Selecting an insurer owned by a family member without disclosure
Selecting a vendor with an undisclosed personal financial relationship is a conflict of interest that violates professional objectivity.
Question 5: When a RIMS member disagrees with a client's decision to accept a risk the member considers unreasonable, the ethical course is to:
- Implement the decision without comment to respect client autonomy
- Refuse to work on any project involving that risk
- Document the professional advice given and implement the client's lawful decision (Correct answer)
- Report the client to RIMS for irresponsible risk management
Correct answer: Document the professional advice given and implement the client's lawful decision
Professionals must respect client autonomy in lawful decisions while ensuring their professional advice is clearly documented.
Question 6: Professional ethics in risk management require that continuing education activities be:
- Limited to activities directly related to current job responsibilities
- Relevant to maintaining and improving professional competence (Correct answer)
- Completed only through RIMS-approved providers
- Documented only when required for credential renewal
Correct answer: Relevant to maintaining and improving professional competence
Continuing education must be aimed at maintaining genuine professional competence, not merely fulfilling administrative requirements.
Question 7: A risk manager is pressured by a supervisor to exclude a material risk from a report to avoid alarming investors. The ethical response is to:
- Comply with the supervisor's request to maintain organizational harmony
- Include the risk and document that removal was requested by the supervisor (Correct answer)
- Remove the risk but note 'information withheld per management instruction'
- Submit two versions of the report to different stakeholders
Correct answer: Include the risk and document that removal was requested by the supervisor
Integrity requires including material information and documenting any pressure to omit it, which creates a record if misconduct is later investigated.
RIMS Ethical Standards & Professional Conduct 3
A risk management professional is presenting risk findings to the board of directors.
Ethical communication requires that the professional: