Last Updated: Aug 30, 2026
No. of Questions: 112 Questions & Answers with Testing Engine
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| Section | Weight | Objectives |
|---|---|---|
| Risk Management Best Practices | 20% | - Internal Controls and Risk Limits - Enterprise Risk Management Framework - Compliance and Regulatory Alignment |
| PRMIA Standards of Best Practice, Conduct and Ethics | 30% | - Ethical Decision-Making Framework - Whistleblowing and Reporting Violations - Conflict of Interest and Disclosure - Code of Conduct and Professional Responsibilities |
| Risk Management Case Studies | 25% | - Long-Term Capital Management (LTCM) - Baring Bank - Orange County - China Aviation Oil - Metallgesellschaft - Northern Rock |
| Corporate Governance Principles | 25% | - PRMIA Governance Principles - Risk Governance Structure - Board and Senior Management Oversight - Transparency and Accountability |
Question 1
According to LTCM managers:
A. Stress Testing was not necessary because their trades were hedged
B. Stress Testing was elaborate, complex and conducted on their entire portfolio. It included the assumptions of a major breakdown in historical correlations
C. Stress Testing looked at the 12 biggest deals with each of their top 20 counterparties
D. Stress Testing was not conducted
Question 2
Which of the following does NOT relate to the Orange County case?
A. Where there are excess rewards, there must be risks
B. The Know Your Customer rule
C. Fractured organisational structure and poor risk oversight mechanism make it easy for powerful individuals to hide risk in the gaps
D. Strategies that are not possible to explain to third parties should not be employed by the risk averse
Question 3
Which is NOT part of the guidance on Professional Conduct in the PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct)?
A. Know and abide by applicable rules and regulations
B. Report to the Regulator any departures from generally accepted methodology or practices
C. Provide advice that is clear and accurate
D. Clearly inform all affected parties of any apparent or actual conflicts of interest
Question 4
Which of the following would have contributed to noticing and preventing Leeson's violations at Barings?
A. More senior level involvement at Barings regarding use of derivatives
B. Recognition that large profits can be an indicator of higher risk
C. Separation of front and back offices
D. All of the above
Question 5
Which of the following are PRMIA Governance Principles?
I. Sufficiency of Key Resources and Process
II. State of the Art Risk Management Technology
III. Ongoing Education and Discernment
IV. Sufficiency of Key Competencies
A. I, III and IV only
B. I and II only
C. I, II and IV only
D. All of these are PRMIA Governance Principles
Solutions:
| Question 1 Answer: C | Question 2 Answer: B | Question 3 Answer: B | Question 4 Answer: D | Question 5 Answer: A |
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