Situational influences

Outside pressures — deadlines, incentives, loyalty to colleagues, what everyone else is doing — that shape behaviour far more than people expect. Those surest they are immune are the most exposed.

Where you will meet it

Situational influences appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Use a structured framework to make ethical decisions
  CFA Level I · Ethical and Professional Standards

  “It runs: identify the relevant facts, the stakeholders and duties owed, and the ethical principles at stake; consider situational influences such as time pressure, incentives and the behaviour of colleagues, and seek additional guidance; decide and act; then reflect on the outcome.”

• Tell apart what the law requires and what ethics demands, and recognise what makes ethical conduct hard
  CFA Level I · Ethical and Professional Standards

  “Challenges to ethical behaviour include overconfidence, the widespread belief that one is more ethical than one's peers, and situational influences, such as money, prestige, loyalty to colleagues or pressure to meet targets, whose effect people routinely underestimate.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with S · Glossary