What is the purpose of Goldman Sachs's code of conduct or risk management principles?

• A. Maximize short-term trading profits without oversight.
• B. Guide ethical behavior, ensure compliance, manage conflicts of interest, and maintain risk controls.
• C. Is only applicable to auditors.
• D. Replace governance with self-regulation.

Answer: (B)

A code of conduct and risk management principles establish the framework for how the firm expects people to act and how the business should be run. They set ethical standards, outline how to handle confidential information, and clarify how to manage conflicts of interest between clients, the firm, and employees. They also define the risk management system—controls, limits, monitoring, and escalation procedures—to identify and address issues before they become problems. Training, oversight, and governance come from these rules, helping to safeguard clients, maintain regulatory compliance, and support prudent decision-making.

That’s why this purpose is best described as guiding ethical behavior, ensuring compliance, managing conflicts of interest, and maintaining risk controls. It’s not about chasing short-term profits without oversight, it’s not limited to auditors, and it doesn’t replace governance with self-regulation; it complements governance by embedding standards and controls throughout the firm.