Chartered Property Casualty Underwriter (CPCU) 540 Practice Exam

What is the primary reason a corporation adopts a code of ethics?

To ensure compliance with law To standardize risk assessment To actively manage ethics in the workplace To increase profits quickly

Correct Answer:

To actively manage ethics in the workplace

Explanation:

A code of ethics serves as a formal statement of an organization’s values and the expected conduct that guides decisions and behavior across the business. Its primary purpose is to actively manage ethics in the workplace by promoting integrity, providing guidance for ethical decision making, and establishing accountability and processes for reporting and addressing misconduct. Legal compliance matters, but a code of ethics goes beyond the law to address principles that can affect trust, stakeholder relations, and everyday choices in ambiguous situations. It’s not mainly about standardizing risk assessment or driving profits quickly; those are not the central aims of an ethics code.

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