Deliberate deception to gain an unfair or unlawful benefit. It can be internal, by staff, or external.
Where you will meet it
Fraud comes up in 22 learning outcome notes across the FRM syllabus.
A few of them:
Banks FRM Part I · Financial markets and products
“Operational risk is loss from inadequate or failed processes, people and systems, or from external events, and includes fraud and legal risk.”
GARP Code of Conduct FRM Part I · Foundations of risk management
“Professional integrity and ethical conduct: act honestly and competently, exercise reasonable care and independent judgment, and never knowingly misrepresent facts or take part in deceit or fraud.”
Operational Risk FRM Part I · Valuation and risk models
“Internal fraud involves at least one insider acting to defraud or evade rules, such as unauthorized trading.”
Credit Scoring and Rating FRM Part II · Credit risk measurement and management
“It suits large homogeneous populations such as consumers and small businesses, and comes in application, behavioural, collection and fraud varieties depending on the decision supported.”
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