Lesson 27 of 34 · All lessons in this module
  1. Standard I: ProfessionalismVideo lesson
  2. Standard I cases: knowledge of the law and dissociation
  3. Standard I cases: pressure on analysts and performance staff
  4. Standard I cases: gifts, travel, manager selection and paid research
  5. Standard I cases: misrepresenting services, products and results
  6. Standard I cases: plagiarism, third-party material and online content
  7. Standard I cases: misconduct and competence
  8. Standard II: Integrity of Capital MarketsVideo lesson
  9. Standard II(A) cases: material, nonpublic or mosaic?
  10. Standard II(A) cases: tipping, experts and firm controls
  11. Standard II(B) cases: rumours, trades and intent
  12. Standard II cases: extra 2026 examples and procedures
  13. Standard III(A)–(B): Loyalty, Prudence, Care and Fair DealingVideo lesson
  14. Standard III(A) cases: client identity, loyalty and brokerage
  15. Standard III(B) cases: dissemination, allocation and priority
  16. Standard III(C)–(E): Suitability, Performance Presentation and ConfidentialityVideo lesson
  17. Standard III(C) cases: IPS, total portfolio and mandates
  18. Standard III(D) cases: fair, accurate and complete performance
  19. Standard III(E) cases: exceptions, channels and firm limits
  20. Standard IV: Duties to EmployersVideo lesson
  21. Standard IV(A) cases: loyalty, outside work and leaving
  22. Standard IV(B) and IV(C) cases: outside pay and supervision
  23. Standard V: Investment Analysis, Recommendations, and ActionsVideo lesson
  24. Standard V(A) cases: reasonable basis and outside research
  25. Standard V(A) cases: models, advisers and providers
  26. Standard V(B) cases: services, costs and process changes
  27. Standard V(B) cases: risks, limitations, facts and opinions
  28. Standard V(C) cases: records and retention
  29. Standard VI: Conflicts of InterestVideo lesson
  30. Standard VI(A) cases: avoiding and disclosing conflicts
  31. Standard VI(B) and VI(C) cases: who trades first and who gets paid
  32. Standard VII: Responsibilities as a CFA Institute Member or CFA CandidateVideo lesson
  33. Standard VII(A) cases: exams, confidentiality and volunteering
  34. Standard VII(B) cases: using the designation, membership and candidacy

Lesson 27 of 34 · 15 min

Standard V(B) cases: risks, limitations, facts and opinions

Say what could go wrong, judged on what you knew at the time, include the factors that drive the conclusion, and label every forecast, estimate and model output as opinion.

In short

  • Significant risks and limitations (leverage, complex instruments, liquidity, capacity, counterparty, country, sector, security-specific and credit risk) must be disclosed as known at the time.
  • A limitation counts now, even if far away: capacity far below its threshold must still be disclosed to current and prospective clients.
  • A loss after disclosure does not show a V(B) breach; not knowing a risk may reveal a V(A) diligence gap instead.
  • Reports must include the important factors; scope may be narrowed if the limits are stated, and capsule lists should say fuller information is available.
  • Fact versus opinion: forecasts, estimates (reserves, earnings, dividends) and model output are opinions; give assumptions and limits and do not promote a model's accuracy.
  • Procedures: encourage rigorous review of publications, keep records on the nature of the research, and be able to supply the factors left out if asked.

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