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The Financial Risk Manager Program
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Sponsored by the Global Association of Risk Professionals, the Financial Risk Manager program is designed to build up knowledge of the risk management industry. Being a relatively new designation, there are currently only a handful of members who hold the FRM designation but an increasing number of candidates are registering each year.
Only spanning 1 level, the exam is offered once a year in November with registration beginning in March of the same year, current membership stands at about 27,000 worldwide.
The examination is deemed to be more mathematical (compared to the CFA examination), and with an average pass rate ranging from just over 40% to just over 60% over the past 5 years, some would argue that the program is still being toned and lacks in certain respects. The FRM Examination is a 5-hour, approximately 140 question, multiple-choice exam. The Examination is split into two 2.5 hour sections and is given in booklet form
The FRM is currently rival to the PRMIA, which in itself is also a risk management examination, but founded only a couple of years ago, and although the pros and cons of that examination will not be discussed on this page, it can be said that most individuals believe one or the other to prosper above the other in the future but which one it will be has yet to be seen.
Topic Outline:
1. Quantitative Analysis (10%)
2. Market Risk Measurement and Management (30%)
3. Credit Risk Measurement and Management (25%)
4. Operational & Integrated Risk Management (20%)
5. Legal, Accounting and Ethics (15%)
The FRM covers many of the key issues which affect risk management departments today, especially topics surrounding Basel II and current topics related to credit risk.
Personal Viewpoint
We feel that with the departure of Scott Schliefer to PRMIA, GARP has lost a key individual behind the strength of the designation over the years. So far, experiences with the new team has been somewhat mixed as the planning of the 2003 program seems to reach various trouble points. But all in all, we believe that the FRM is a useful program to take as it covers a wide array of risk management knowledge which will be essential, even if you are not a risk professional, particular as the current debate of Basel II continues to fill global news.
- Note: All data and factual information was taken from the GARP website and GARP does not endorse nor contribute to this webpage.