The FRM Qualification
The Financial Risk Management (FRM) qualification and Market Risk Measurement and Management module was created in 1997 by the Global Association of Risk Professionals (GARP). The FRM was designed for those in the risk management sector who were seeking to broaden their knowledge and skill base and update their functionality with current concepts and strategies applicable to their profession.
The GARP FRM has now achieved a global reputation for offering the opportunity of enhanced employability and career advancement. It is held by over 21,000 individuals operating in the credit risk management industry around the world.
Career opportunities offered by the attainment of the FRM qualification include:
• Senior Risk Analyst
• Director of Risk Management
• Head of Operational Risk, and
• Leading Risk Officer
These applications would be wholly appropriate to the banking and financial services industry, government regulators, or consultancy firms.
With the focus and pace of the financial services industry constantly evolving, those who are responsible for the management of money and investments need to ensure that their knowledge remains relevant and current to all new legislation and compliance. Also, you need to have an extensive grounding in what is financial management. Undertaking the FRM risk management training will deliver an excellent solution to this requirement.
The FRM Course Structure
FRM finance courses are studied as a two-tier application.
FRM Part 1
The topics included in Part 1 are shown below with their individual course weightings:
• The Foundations of Risk Management (20%)
• Quantitative Analysis (20%)
• Financial Markets and Products (30%)
• Valuation and Risk Models (30%)
FRM Part 2
Part 2 of the programme includes:
• Market Risk Measurement and Management (25%)
• Credit Risk (25%)
• Operational and Integrated Risk Management (25%)
• Risk and Investment Management (15%)
• Current Issues in the Financial Markets (10%)
FRM Exam Details
Examination assessment of the Part 1 element consists of 100 multiple choice questions and the Part 2 element has 80 multiple choice questions. Prior to the commencement of the FRM risk management courses, you are required to register with GARP (fees from 300 US dollars).
If you would like to sit for the FRM examinations in November 2012, then you have until the 31st July to be eligible for the Early Registration fee of 350 US dollars. Standard Registration from 1st to 31st August carry fees from 475 US dollars and Late Registration from 1st September to 15th October will incur fees from 650 US dollars.
Pass rates for the FRM assessments are graded on a curve against the top 5% of candidates. The average rate for the Part 1 exam is 50% and the Part 2 element 60%.
Market Risk Measurement and Management Module – Syllabus Information
When you consider the complexity of the syllabus content for a single FRM course module, it is easy to see why GARP recommends that you devote a minimum of 200 study hours to both Part 1 and Part 2 of the course.
Topics featured in the Market Risk Measurement and Management module include the following:
• Subprime Mortgages and Security
• Counterparty Risks and OTC (over the counter) Derivatives
• Credit Derivatives
• Default Swaps and Linked-notes
• Structured Finance
• Subordination and Tranching
• Priority and Risk Management
• Credit Scoring and Spreads
• The Probability of Default
• Given Default and Recovery Rates
• Expected and Unexpected Loss
• The KMV Model and Contingent Claim Approach
• Default Time Correlations
• Portfolio Credit Risk
• Credit Risk Management Models
• Risk Mitigation Techniques
• Rating Triggers
• Netting, and
With such a complex and challenging syllabus, you may be glad to avail yourself of the study support material, available to download free of charge from GARP. In addition to past examination papers and worked examples, they offer the:
• FRM Exam Preparation Handbook
• FRM Study Guide, and
• FRM Applying Instructional Materials textbook
Additionally, you may also order the 2012 Part 2 Exam Books which contain all of the modules included in the course. These are available from GARP for costs from 440 US dollars.
FRM Financial Courses and Providers
Currently the only provision for the FRM exam in the UK is administered through Kaplan Financial in London. They offer a choice of options including a six weekday programme for costs from £1,300 and a 12 evening application with fees from £1,400. If you are looking to sit your FRM examination in November 2012, the three day Weekend Revision Course (priced from £730) could prove to be a worthwhile investment.
Kaplan Financial also provides mock exams for both Part 1 and Part 2 of the course. If you are preparing to sit your assessment on 12th November 2012, you would benefit from attending the 'mocks' scheduled for the 3rd November. Priced from £65 these assessments provide an exact representation of the actual exam conditions and will help you to familiarise yourself with the structure, format and context and prepare himself for the 'big day'.