Governance, Regulation and Ethical Practice

Introduction

Risk management in finance and insurance is not only a technical activity concerned with identifying hazards, estimating losses and purchasing protection. It is also a system of authority, accountability and behaviour. Governance determines who makes risk decisions, how those decisions are challenged and how the organisation is held responsible for its effects on policyholders, investors, employees, intermediaries and society.

Weak governance can transform an otherwise manageable risk into a systemic failure. The collapse of an insurer, the mis-selling of unsuitable products, discriminatory underwriting, misuse of personal data or concealment of material information may each arise from failures of culture and oversight rather than from an absence of technical expertise. Accordingly, effective risk management requires sound boards, independent control functions, reliable internal controls, regulatory compliance and ethical judgement.

This chapter examines the relationship between corporate governance, regulation and ethical practice in risk management and insurance. It focuses on board and risk-function responsibilities, internal control, compliance, consumer protection, conduct risk, conflicts of interest, fairness in underwriting, privacy, inclusion and professional standards.

Learning Objectives

By the end of this chapter, students should be able to:

1. Explain the governance responsibilities of boards, senior management and control functions.
2. Distinguish risk management, compliance, internal audit and internal control.
3. Analyse how regulation protects solvency, market integrity and consumers.
4. Evaluate conduct risk, conflicts of interest and fairness in underwriting.
5. Apply ethical principles to privacy, inclusion, product design and claims handling.
6. Assess governance failures and recommend proportionate corrective actions.

1. Governance as a Risk-Control System

Corporate governance is the framework by which an organisation is directed, controlled and held accountable. In insurance and financial services, governance must address two related questions:

• Prudential question: Can the organisation meet its financial obligations, including claims and other liabilities?
• Conduct question: Does the organisation deal fairly, honestly and transparently with customers and other stakeholders?

A company may be financially strong but ethically defective, for example if it systematically sells unsuitable products. Conversely, an organisation may have good intentions but inadequate controls, resulting in inaccurate reserves or failure to pay valid claims. Sound governance therefore combines financial resilience with responsible conduct.

The governance chain

A useful model is a chain of accountability:

Owners and stakeholders → board of directors → senior management → business units and employees → customers and counterparties

The board does not perform every operational task. Its role is to set direction, approve strategy and risk appetite, appoint and monitor senior management, and ensure that credible systems of control exist. Senior management translates these expectations into policies, processes and resources. Employees and intermediaries implement them in daily decisions. Information must travel upward so that the board can identify emerging problems rather than merely receive confirmation that targets have been met.

The board’s principal responsibilities

A board of an insurer or financial institution normally has responsibility for:

• approving strategy and risk appetite;
• ensuring adequate capital, liquidity and operational resilience;
• overseeing the effectiveness of internal controls;
• appointing, challenging and, where necessary, replacing senior executives;
• ensuring that risk, compliance and audit functions have sufficient independence and resources;
• approving major products, outsourcing arrangements and significant transactions;
• overseeing customer outcomes and conduct risk;
• ensuring accurate, timely and balanced disclosure;
• promoting an ethical culture and accountability for misconduct; and
• considering the interests of relevant stakeholders within the legal framework.

The board should not treat risk as a specialist issue delegated entirely to a risk committee. Delegation transfers authority to act but does not eliminate ultimate oversight responsibility. Directors must possess, or obtain access to, sufficient knowledge to understand material risks and to challenge management effectively.

Board committees

Many organisations use committees to deepen oversight. A risk committee may review enterprise risk, stress testing, emerging risks and risk appetite. An audit committee may oversee financial reporting, internal audit and external audit. A remuneration committee may assess whether incentives encourage excessive risk-taking or poor customer outcomes. A nomination and governance committee may address board composition, succession and competence.

Committees improve focus, but they can also create fragmentation. Important matters should be escalated to the full board, and committee mandates must be clear. The board remains responsible for seeing how risks interact—for example, how remuneration incentives, weak complaints data and aggressive sales targets may jointly create conduct risk.

2. Risk Appetite and the Three Lines Model

Risk appetite expresses the amount and type of risk an organisation is willing to accept in pursuit of its objectives. It should be more specific than a general statement such as “the organisation has a low tolerance for risk.” Effective risk appetite statements identify boundaries, escalation thresholds, responsibilities and monitoring indicators.

Examples include:

• no tolerance for deliberate misrepresentation to customers;
• a specified maximum exposure to a class of catastrophe risk;
• minimum service standards for claims processing;
• limits on investment concentration; and
• thresholds for complaints, control failures or data breaches.

Risk appetite must be connected to strategy, capital, operational capacity and performance incentives. A target that cannot be achieved within approved risk limits is a governance failure, not merely a planning error.

The three lines model

A widely used framework separates responsibilities into three lines:

The first line owns risks; it cannot transfer accountability simply by asking the risk function to approve a decision. The second line develops frameworks, advises, monitors and challenges. The third line independently evaluates whether governance and controls are designed and operating effectively.

The model is not a rigid organisational chart. In a small organisation, one person may perform several roles, but conflicts must be recognised and mitigated. Independence is especially important where a function is expected to challenge revenue-producing activities.

The chief risk officer and risk function

The chief risk officer (CRO) commonly coordinates enterprise risk management, maintains the risk framework, reports material exposures and supports the board’s understanding of risk. A strong CRO should have access to the board or risk committee without management interference. The risk function should be involved early in product development, outsourcing, major investments and strategic change—not merely asked to review decisions after they have been made.

However, the CRO does not “own” every risk. Business managers remain accountable for risks generated by their activities. This distinction prevents risk management from becoming a compliance ritual in which operational managers assume that the risk department is responsible for all consequences.

3. Internal Control and Assurance

Internal control consists of policies, procedures, structures and behaviours designed to provide reasonable—not absolute—assurance that an organisation will achieve its objectives. Control objectives commonly concern:

1. effective and efficient operations;
2. reliable financial and management reporting;
3. compliance with laws, regulations and internal policies; and
4. protection of assets, information and customer interests.

Examples in insurance include segregation of underwriting and claims authority, approval limits, reconciliations of premium receipts, controls over reserve changes, access management, complaint monitoring and documented claims decisions.

Components of an effective control environment

An effective control system normally includes:

• Control environment: leadership values, accountability, competence and organisational structure.
• Risk assessment: identification and evaluation of threats to objectives.
• Control activities: approvals, reconciliations, segregation of duties, access restrictions and exception controls.
• Information and communication: accurate information reaching the right decision-makers promptly.
• Monitoring: ongoing supervision and independent reviews of control performance.

Controls may be preventive, detective or corrective. A system that requires approval before a high-value payment is preventive. A reconciliation identifying an unauthorised payment is detective. Recovering funds and changing the process is corrective. Effective systems use an appropriate combination.

Limitations of internal control

Controls can fail because of human error, management override, collusion, poor design, inadequate training, excessive complexity or changes in the operating environment. A control may exist on paper but be ineffective in practice. For example, a supervisor may formally review claims but approve every case without examining evidence. Internal control therefore requires testing of both design and operation.

Internal audit should assess whether controls are appropriate and effective, but it should not design or operate the controls it later audits. External audit provides an additional, usually narrower, assurance perspective focused substantially on financial reporting and related matters. Neither internal nor external audit replaces management responsibility.

4. Regulation and Compliance

Financial regulation pursues several objectives that may conflict in particular cases:

• maintaining solvency and financial stability;
• protecting policyholders and other consumers;
• promoting fair, efficient and transparent markets;
• preventing financial crime;
• supporting competition and innovation; and
• protecting personal data and market confidence.

Regulatory systems differ by jurisdiction, but commonly include licensing, prudential supervision, conduct supervision, reporting obligations, enforcement powers and compensation or resolution arrangements.

Prudential and conduct regulation

Prudential regulation focuses on the safety and resilience of firms. It may address capital adequacy, technical provisions, reinsurance, investment quality, liquidity, governance and recovery planning.

Conduct regulation focuses on how firms behave toward customers and markets. It may address product governance, disclosure, advice, sales practices, claims handling, complaints, vulnerable customers, conflicts and fair treatment.

The distinction is analytical rather than absolute. Poor conduct can create financial and reputational losses, while weak financial condition can harm consumers through delayed or unpaid claims.

Compliance management

Compliance is the process of identifying applicable obligations, translating them into controls, monitoring adherence, reporting breaches and supporting remediation. A mature compliance programme includes:

1. a legal and regulatory obligations register;
2. clear ownership of obligations;
3. policies and procedures proportionate to risk;
4. staff training and communications;
5. monitoring and thematic reviews;
6. breach escalation and regulatory reporting where required; and
7. root-cause analysis and corrective action.

Compliance should not be reduced to checking whether a form was completed. It should assess whether the organisation achieved the purpose of the rule. For example, a disclosure may technically exist but still be ineffective if it is unreadable, misleading or presented after the customer has committed to the product.

5. Consumer Protection and Conduct Risk

Conduct risk is the risk that an organisation’s behaviour produces unfair outcomes, market harm or loss of trust. It may arise intentionally or unintentionally through product design, incentives, communication, technology or claims practices.

A customer-outcome perspective asks:

• Is the product designed for a clearly identified target market?
• Does it provide reasonable value relative to its price and coverage?
• Is information clear, timely and comprehensible?
• Are sales and advice processes suitable for the customer?
• Can customers access support, make claims and complain effectively?
• Are vulnerable customers treated with appropriate care?

Product governance

Product governance should begin before launch and continue throughout the product life cycle. The organisation should define the target market, identify foreseeable misuse, test exclusions and pricing, establish distribution controls, monitor outcomes and review the product when evidence indicates harm or poor value.

An insurance product with a low headline premium may not offer value if exclusions are extensive, claims are difficult to establish or important risks are not covered. Value is therefore not equivalent to low price.

Claims handling and complaints

Claims handling is a critical moment of truth. Fair practice requires consistent criteria, reasonable investigation, clear reasons for decisions, accessible review mechanisms and timely communication. A complaint is not merely an administrative burden; it is evidence about potential product, process or cultural defects.

Complaint data should be analysed for patterns by product, channel, geography, customer characteristics and claim outcome. A rising number of complaints may indicate a control issue even when the formal complaint ratio remains within a historical range.

Vulnerable customers and inclusion

Vulnerability may arise from age, disability, illness, bereavement, financial distress, language barriers, limited digital access or temporary life circumstances. It is not a fixed identity and should not automatically be inferred from a protected characteristic. Firms should provide accessible communications, reasonable adjustments, alternative channels and appropriately trained staff.

Inclusion means more than offering identical treatment. Identical treatment can produce unequal outcomes where customers have different needs. Fairness requires that differences in treatment be relevant, proportionate, transparent and legally permissible.

6. Fairness in Underwriting and the Use of Data

Underwriting involves assessing risk, setting terms and deciding whether to accept an application. Legitimate risk differentiation supports insurance economics: premiums should reflect expected claims, expenses, capital requirements and other relevant factors. Yet statistical relevance alone does not settle every ethical or legal question.

A factor may be predictive but objectionable if it acts as a proxy for a protected characteristic, relies on poor-quality data, lacks transparency or produces disproportionate harm. Underwriters must therefore consider:

• data quality and representativeness;
• actuarial relevance and causal justification;
• consistency of application;
• transparency and explainability;
• disparate impact on groups;
• accessibility and availability of essential cover; and
• applicable legal restrictions.

Fairness does not necessarily require identical premiums for all customers. It requires a defensible basis for distinctions and controls against arbitrary, discriminatory or excessive outcomes. Governance should include model validation, documented underwriting authority, exception monitoring and periodic outcome testing.

Algorithmic underwriting

Automated underwriting can improve speed, consistency and fraud detection, but it can also reproduce historical bias. A model trained on past claims decisions may learn patterns that reflect unequal access to insurance rather than underlying risk. A responsible process includes:

1. clear specification of the decision purpose;
2. documented data provenance and quality checks;
3. testing for errors and disparate outcomes;
4. human review for exceptional or adverse decisions;
5. explanations appropriate to the decision and customer;
6. security and access controls; and
7. ongoing monitoring after deployment.

A model should not be treated as neutral merely because it is mathematical. Accountability remains with the organisation using it.

7. Conflicts of Interest

A conflict of interest occurs when a personal, financial or institutional interest may improperly influence professional judgement, or may reasonably appear to do so. Conflicts can be actual, potential or perceived.

Common examples include:

• an intermediary receiving higher commission for one insurer’s product;
• an underwriter approving business introduced by a close associate;
• an employee trading on confidential information;
• a board member having an interest in a supplier;
• a claims handler being rewarded for reducing claim payments; and
• a consultant simultaneously advising competing parties.

The correct response is not always prohibition. A proportionate framework identifies, assesses, discloses and manages conflicts. Controls may include recusal, independent review, information barriers, rotation, remuneration redesign, customer disclosure or withdrawal from the transaction. Disclosure alone is inadequate where customers cannot reasonably understand the conflict or where the conflict is too severe to manage.

Remuneration is a major source of conduct risk. Incentives based solely on sales volume, claims savings or short-term profit may encourage unsuitable sales, excessive denials or concealment of adverse information. Balanced scorecards should include quality, persistency, complaints, customer outcomes, compliance and risk indicators.

8. Privacy, Confidentiality and Information Governance

Insurance depends on personal and sometimes highly sensitive information. Examples include medical details, financial records, driving history, location data and information about prior claims. Privacy governance requires lawful collection, a specified purpose, data minimisation, accuracy, secure storage, controlled sharing and appropriate retention and deletion.

Important principles include:

• collect only information reasonably necessary for a legitimate purpose;
• inform individuals about how their data will be used;
• restrict access according to job need;
• protect information against unauthorised disclosure and cyberattack;
• correct inaccurate records;
• manage third-party and cloud-service risks; and
• provide appropriate rights and remedies under applicable law.

Privacy is not merely an information-technology issue. Product design, underwriting, marketing, claims, human resources and procurement all create privacy risks. Boards should receive reporting on significant breaches, control weaknesses and the organisation’s ability to respond.

The use of artificial intelligence increases the importance of data governance. Organisations should be able to explain the purpose, data inputs, oversight arrangements and limitations of automated decisions. They should also establish procedures for challenging outcomes and correcting harmful errors.

9. Professional Ethics and Decision-Making

Professional ethics concerns the principles guiding conduct when rules do not provide a complete answer. Important principles include:

• Integrity: acting honestly and avoiding deception.
• Objectivity: resisting bias, pressure and conflicts.
• Competence and due care: maintaining knowledge and performing work carefully.
• Confidentiality: protecting information obtained through professional work.
• Fairness: considering legitimate interests and avoiding unjustifiable discrimination.
• Accountability: accepting responsibility and correcting mistakes.
• Courage: escalating concerns even when doing so is uncomfortable.

An ethical decision process can be structured as follows:

1. Identify the facts, affected parties and relevant uncertainty.
2. Identify legal, regulatory, professional and organisational obligations.
3. Identify conflicts, power imbalances and foreseeable harms.
4. Consider alternative actions and their short- and long-term effects.
5. Seek independent challenge where judgement is contested.
6. Choose the option that is lawful, fair, proportionate and defensible.
7. Document the reasoning and monitor the outcome.

This process does not guarantee agreement, but it makes reasoning visible and supports accountability.

10. Illustrative Case: Meridian Mutual’s Automated Claims Project

Background

Meridian Mutual, a fictional regional insurer, introduced an automated claims-screening system to reduce processing time. The system flagged claims for manual review using prior claims data, repair estimates and customer information. Management linked executive bonuses to reductions in claims expense and average processing time.

Problem

Within a year, complaints increased among customers in low-income neighbourhoods and among customers using non-standard repair providers. The model frequently flagged these claims as suspicious. Claims staff were instructed to treat the system’s risk score as a strong presumption against payment. The board received monthly savings reports but no analysis of complaint patterns, approval rates or outcomes by customer group.

Analysis

Several governance failures were present:

• The first line treated a model output as a decision rather than as an input to judgement.
• The risk and compliance functions were consulted after implementation and lacked authority to require testing.
• Incentives rewarded claims savings without balancing customer outcomes.
• Data may have reflected historical investigative practices rather than genuine fraud risk.
• The board’s information was incomplete and focused on financial performance.
• Customers received generic explanations and had limited ability to challenge decisions.

The issue was not necessarily that automation was impermissible. The problem was inadequate governance, weak validation and an incentive structure that could magnify errors.

Approach and solution

Meridian suspended automatic adverse decisions and commissioned an independent review. It then:

1. separated fraud indicators from final claims decisions;
2. tested error rates and outcomes across relevant customer groups;
3. required documented human review for adverse decisions;
4. revised remuneration to include complaint resolution, fairness and claim quality;
5. improved explanations and appeal routes;
6. gave the risk function authority to approve material model changes;
7. introduced board reporting on customer outcomes as well as savings; and
8. established periodic model validation and post-deployment monitoring.

Outcome

Processing efficiency declined temporarily, but unjustified claim referrals fell and complaint resolution improved. The organisation gained a more accurate understanding of genuine fraud exposure and restored confidence among intermediaries and customers.

Learning points

The case demonstrates that effective governance must cover technology, incentives, data, customer outcomes and accountability together. A technically sophisticated model cannot compensate for poor oversight. Control functions should be involved before implementation, and boards need balanced information that reveals both benefits and harms.

11. Challenges and Limitations

Governance frameworks have practical limitations. Excessive procedures can create bureaucracy, delay legitimate decisions and encourage employees to focus on evidence of compliance rather than actual outcomes. Conversely, principles-based regulation may provide flexibility but create uncertainty about expectations. Rules may also conflict across jurisdictions, particularly for multinational organisations.

Measurement is difficult. Culture, fairness and trust cannot be captured fully by a single indicator. Low complaints may indicate good service—or that customers cannot access the complaint system. Similarly, a low breach count may indicate effective controls—or weak reporting.

Boards also face information asymmetry. Management controls operational information and may unintentionally or deliberately present an overly positive picture. Independent challenge, direct access to control functions, varied expertise and protected escalation channels help reduce this problem.

Finally, ethical judgement cannot be outsourced to a regulator, algorithm or compliance checklist. Organisations must decide how to act responsibly where law is silent, uncertain or insufficient to prevent harm.

12. Best-Practice Framework

A proportionate governance programme should:

• define board and management responsibilities clearly;
• connect strategy, risk appetite, capital and incentives;
• preserve the independence and authority of control functions;
• maintain effective internal controls and test their operation;
• integrate compliance into product and process design;
• monitor customer outcomes across the product life cycle;
• identify and manage conflicts of interest;
• test underwriting and automated decisions for fairness;
• protect personal information throughout its life cycle;
• support whistleblowing and non-retaliation;
• use complaints and incidents as sources of organisational learning; and
• report balanced information to the board, including adverse trends and uncertainty.

Good governance is therefore not a static structure. It is a continuing process of setting expectations, obtaining evidence, challenging assumptions, correcting failures and learning from outcomes.

Chapter Summary

Governance, regulation and ethical practice form an integrated foundation for responsible risk management and insurance. The board sets strategy, risk appetite and accountability, while senior management implements policies and controls. The three lines model clarifies that business units own risk, risk and compliance functions provide oversight, and internal audit provides independent assurance.

Internal control supports effective operations, reliable reporting, compliance and asset protection, but it provides reasonable rather than absolute assurance. Prudential regulation protects financial resilience, while conduct regulation promotes fair treatment and market integrity. Consumer protection requires attention to product value, clear communication, suitable distribution, fair claims handling and accessible complaints processes.

Conduct risk arises when products, incentives, data or processes produce poor outcomes. Fair underwriting requires relevant and defensible risk differentiation, control of bias and monitoring of automated decisions. Conflicts of interest must be identified and managed, not merely disclosed. Privacy requires responsible collection, use, storage and sharing of personal information. Professional ethics adds integrity, objectivity, competence, fairness, confidentiality and accountability where formal rules are incomplete.

The central lesson is that governance is judged by outcomes, not by the existence of policies alone. Effective institutions combine sound structures with ethical culture, independent challenge, reliable information and the willingness to correct harmful practices.

Key Terms

Governance: The system by which an organisation is directed, controlled and held accountable.

Risk appetite: The amount and type of risk an organisation is willing to accept in pursuing its objectives.

Board oversight: The board’s responsibility to direct strategy, monitor management and supervise material risks.

Three lines model: A framework distinguishing operational risk ownership, oversight functions and independent assurance.

Internal control: Policies and procedures designed to provide reasonable assurance over operations, reporting and compliance.

Compliance: The process of identifying obligations, monitoring adherence and addressing breaches.

Prudential regulation: Regulation concerned principally with financial soundness, solvency and resilience.

Conduct regulation: Regulation concerned with market behaviour and fair customer outcomes.

Conduct risk: The risk that organisational behaviour causes unfair outcomes, market harm or loss of trust.

Product governance: Oversight of product design, distribution, value and performance throughout the product life cycle.

Conflict of interest: A situation in which an interest may improperly influence professional judgement.

Fair underwriting: Risk assessment based on relevant, defensible and proportionate distinctions.

Vulnerability: Circumstances that may reduce a customer’s ability to understand, access or use financial services effectively.

Model risk: The risk of error or harmful reliance arising from a model’s design, data or use.

Privacy: Responsible control over the collection, use, disclosure and retention of personal information.

Professional ethics: Principles guiding responsible conduct beyond minimum legal compliance.

Whistleblowing: Reporting suspected wrongdoing through protected internal or external channels.

Reasonable assurance: A high but not absolute level of confidence that objectives and controls are effective.

Review Questions

Short Answer Questions

1. What are the principal responsibilities of a board in an insurance organisation?
2. Distinguish prudential regulation from conduct regulation.
3. Explain the three lines model.
4. Why is disclosure alone sometimes insufficient to manage a conflict of interest?
5. Identify four principles of responsible privacy governance.

Long Answer Questions

1. Explain how risk appetite should be connected to strategy, capital, incentives and board oversight.
2. Discuss the role and limitations of internal controls, internal audit and compliance functions.
3. Analyse the relationship between product governance and consumer protection.
4. Explain how an insurer can promote fairness in underwriting when using automated decision systems.
5. Evaluate the importance of ethical culture in preventing conduct risk.

Analytical / Application Questions

1. An insurer rewards claims staff solely for reducing claim payments. Identify the governance and conduct risks and recommend a revised control and remuneration framework.
2. A pricing model produces lower premiums for one group but substantially higher rejection rates for another group. Design an investigation addressing data quality, fairness, legal compliance and customer outcomes.
3. A board receives excellent profitability reports but increasing complaints, staff turnover and regulatory enquiries. What information should it request, and how should it determine whether the problem is cultural, operational or strategic?

Multiple Choice Questions with Answers

Question 1

Which responsibility remains with the board even when authority is delegated to a risk committee?

A. Every operational underwriting decision

B. Ultimate oversight of material risks and governance

C. Preparation of every customer communication

D. Execution of all internal audit tests

Correct Answer: B. Ultimate oversight of material risks and governance

Question 2

Under the three lines model, which group normally owns and manages business risk?

A. The first line, including business units

B. The external auditor

C. The board secretary

D. The regulator

Correct Answer: A. The first line, including business units

Question 3

What is the primary focus of prudential regulation?

A. Advertising creativity

B. Employee recruitment

C. Financial soundness and resilience

D. Brand positioning

Correct Answer: C. Financial soundness and resilience

Question 4

Which practice best represents effective product governance?

A. Reviewing a product only when sales decline

B. Defining a target market and monitoring outcomes throughout the product life cycle

C. Maximising premium income without reviewing exclusions

D. Allowing distributors to determine all product terms

Correct Answer: B. Defining a target market and monitoring outcomes throughout the product life cycle

Question 5

Why can an apparently predictive underwriting variable still raise ethical concerns?

A. Prediction is never relevant to insurance

B. It may act as a proxy for a protected characteristic or produce disproportionate harm

C. All risk differentiation is automatically unlawful

D. Customers must always pay identical premiums

Correct Answer: B. It may act as a proxy for a protected characteristic or produce disproportionate harm

Question 6

Which response is generally appropriate when an employee has a significant conflict of interest?

A. Conceal it if the transaction is profitable

B. Increase the employee’s bonus

C. Use measures such as disclosure, recusal or independent review

D. Transfer the conflict to a customer

Correct Answer: C. Use measures such as disclosure, recusal or independent review

Question 7

What does reasonable assurance about internal control mean?

A. A guarantee that no loss can occur

B. A high but not absolute level of confidence

C. Assurance provided only by the regulator

D. A conclusion that controls never need testing

Correct Answer: B. A high but not absolute level of confidence

Question 8

Which is an example of detective control?

A. Requiring approval before a high-value payment

B. Restricting system access before employment begins

C. Reconciling payments to identify unauthorised transactions

D. Changing a process after a fraud has occurred

Correct Answer: C. Reconciling payments to identify unauthorised transactions

Question 9

Why should automated claims decisions receive ongoing monitoring?

A. Models are unaffected by changes in data or circumstances

B. Historical data and model use may create errors or unequal outcomes

C. Monitoring eliminates the need for human accountability

D. Regulation prohibits all automation

Correct Answer: B. Historical data and model use may create errors or unequal outcomes

Question 10

Which statement best describes professional ethics?

A. Following only instructions that increase profit

B. Applying principles such as integrity, objectivity, fairness and accountability

C. Replacing all laws with personal preferences

D. Avoiding documentation of difficult decisions

Correct Answer: B. Applying principles such as integrity, objectivity, fairness and accountability