Free GARP RAI Exam Questions

Question 1

A financial institution is implementing an AI model that uses proxies for loan approval decisions. Which of the following is a potential risk associated with using proxies?

A : Proxies might result in simplified metrics that don’t align with the actual objective.

B : Proxies require extensive computational resources.

C : Proxies ensure a direct alignment with the model’s intended objective.

D : Proxies make the model fully explainable to external auditors.

Answer: A

Question 2

A social media platform’s content recommendation algorithm repeatedly suggests similar content to users based on previous interactions, creating a feedback loop that reinforces certain perspectives. What type of algorithmic bias does this illustrate?

A : Automation bias

B : Explicit bias

C : Implicit bias

D : Cognitive bias

Answer: C

Question 3

An investment firm is setting up its model risk management framework. Who is primarily responsible for approving or rejecting models based on validation results?

A : Model developers

B : Internal auditors

C : Senior management

D : Model validators

Answer: C

Question 4

An insurance company is using a neural network for classifying claims as "Fraudulent" or "Non-Fraudulent." They decide to use ReLU (Rectified Linear Unit) as the activation function for the hidden layers. What is the primary purpose of using an activation function like ReLU in this neural network?

A : To scale the output between 0 and 1

B : To introduce non-linearity

C : To calculate weights in the hidden layers

D : To set bias terms to zero

Answer: B

Question 5