Financial Risk Management (FRM)
The Financial Risk Management (FRM) UK course will provide you with a qualification to manage financial risk for businesses. The exam is popular for those in many different roles, and if you ask the question, "What is financial management?" indeed there is no simple answer.
Financial management covers a fairly wide area of employment including:
• jobs in accounting
• credit risk management, and
The FRM is overseen by the Global Association of Risk Professionals (GARP) and the qualification is globally recognised.
The exam itself is available for you to sit in May and November of each year. It is sat in two parts, both of which are four hours long. The morning session comprises one hundred multiple choice questions, whereas the afternoon paper is eighty questions in length. You should answer all questions on the paper. You must past the first paper in order for their second paper to be marked.
GARP FRM Exam
The content of the FRM Investment Management and Risk Management exam, according to GARP, is based on feedback from financial institutions as to what a financial risk manager in the global market place needs to know.
The first paper of the FRM exam covers knowledge of the tools used to calculate financial risk. The topics and their respective weightings in the exam are as follows:
• Quantitative Analysis (20 per cent)
• Risk Models and Valuation (30 per cent)
• Financial Products and Markets (30 per cent), and
• Foundations of Risk Management (20 per cent)
The second paper, including content from the Investment Management and Risk Management module, requires students to apply the tools examined in the first paper, and the topics and weightings are:
• Credit Risk (25 per cent)
• Market Risk (25 per cent)
• Investment Management and Risk Management (15 per cent)
• Operational Risk (25 per cent), with the final 10 per cent covering current issues relating to Financial Markets.
FRM Exam Questions
As with all finance courses, part of your study will include looking at previous exam papers and trying out sample questions. GARP provide past FRM exam papers and sample papers on their website for you to download. You can access these to help you prepare for the Investment Management and Risk Management module.
A typical example of a paper two question as supplied by GARP gave two statements about mortgage backed securities:
a) that as yield volatility rises the value of the MBS also grows, and
b) the duration of an MBS will increase if interest rates rise
You are then asked which statement is correct and are offered the choice of answers a, b, a & b or neither. Other questions on the paper will require more calculation and all questions have to be completed using GARP approved calculators, more details of which can be found on their website.
Risk Management Training
GARP approve companies from across the world to run their risk management courses. In the UK, the approved provider is Kaplan Financial and they offer the training as either a classroom based or an online option depending on the needs of the student.
The classroom based courses are available as full time weekday courses or part time evening courses. As well as the basic course, they also offer revision days. The FRM course run by Kaplan follows the latest exam content as detailed in the GARP FRM candidate guide. Speak to a course advisor to get more details about what is covered in the syllabus and if this course is right for you.