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PRMIA 8004 Exam Syllabus Topics:
| Section | Weight | Objectives |
|---|---|---|
| PRMIA Case Studies | 50% | - Root cause identification - Historical risk failure analysis - Risk management lessons learned - Application of risk principles to scenarios |
| PRMIA Principles of Good Governance | 20% | - Risk governance frameworks - Transparency and disclosure - Board and senior management responsibilities - Risk appetite and accountability |
| PRMIA Standards of Best Practice, Conduct and Ethics | 30% | - Professional integrity and accountability - Code of professional conduct - Compliance with laws and regulations - Ethical decision-making framework |
PRMIA PRM Certification - Exam IV: Case Studies; Standards: Governance, Best Practices and Ethics Sample Questions:
1. When describing the reasons for the collapse of China Aviation Oil, which of the following was not cited?
A) Loss generating positions were rolled over by selling options on larger positions to generate cash premiums' to settle existing position losses
B) Time value was not taken into account during the contract valuation process
C) Senior management in China were aware of the positions but did not understand the complexities of risk managing them
D) No properly defined risk management policies in place and general lack of oversight by senior management
2. According to LTCM managers:
A) Stress Testing was not necessary because their trades were hedged
B) Stress Testing was not conducted
C) Stress Testing looked at the 12 biggest deals with each of their top 20 counterparties
D) Stress Testing was elaborate, complex and conducted on their entire portfolio. It included the assumptions of a major breakdown in historical correlations
3. The problems which initiated the crisis at Northern Rock during the summer of 2007 were:
A) Large customer withdrawals despite the UK regulator and the UK Treasury giving assurances that the bank was solvent
B) Doubts arising about the viability of the business model which necessitated Bank of England intervention
C) A general lack of confidence in mortgage backed securities associated in large part with developments in the US sub-prime mortgage market, and doubts emerging about the viability of the Northern Rock business model
D) A depositor run on the bank, following doubts about the viability of the Northern Rock business model
4. John Smith wants to run for election to the Board of Directors of PRMIA. To be nominated, he needs:
A) The backing of five other members and to be serving on at least one PRMIA Committee
B) The backing of 6% of local members
C) The backing of three other members
D) To go through a screening process conducted by the Nominations Committee
5. The key people involved in the application of good governance and risk management must:
I be trustworthy
II be honest
III be approved by the local regulator
IV treat others fairly at all times
A) I, II, and IV only
B) I, II, III and IV above
C) III only
D) I, II, and III only
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: C | Question # 3 Answer: C | Question # 4 Answer: C | Question # 5 Answer: A |
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