2009
FRM
Examination
STUDYGUIDE
®
In response to the changes occurring in the global markets and in recogni- tion of the growing complexities associated with the profession of financial risk management, GARP has revised its FRM certification program. By implementing the revised program this year, GARP’s FRM Committee and Board ofTrustees have responded to market-driven requirements and outwardly demonstrated the view that risk management is a dynamic discipline that must continuously encompass product innovation and evolve with changing market conditions.The events of the past 24 months have led to a rapidly growing and recognized need for skilled risk managers world- wide.To objectively ensure their skill sets are sufficient to meet both the challenges and opportunities of an increasingly global and interconnected financial environment, the FRM program’s syllabus was revised to more adequately measure a candidate’s understanding of the tools necessary to assess financial risks, and the candidate’s ability to apply those tools in a practice-type setting.This FRM program change is designed to ensure that the FRM designation continues to evolve and represent the high standards for which it is recognized worldwide.This year the FRM program will transition to a two-level examination format by offering for the last time the full FRM exam, and for the first time, Level I of the new two-level FRM exam program. Level I covers core areas of risk management such as quantitative analysis, financial markets and products,and essential risk modeling. Level II covers specific topics on the practical implementation and execution of approaches to measuring and managing market, credit, operational and firm-wide risks, and also includes a new section covering current issues in financial markets.Commencing in 2010, both Levels I and II will be offered to candidates every May and November.The FRM Committee will continue to publish annually the FRM Study Guide which will define the topics, readings, and test weights for both the Level I and II programs for that year.In this transition year, the FRM includes two options for November 2009.Candidates can choose to take the last full FRM exam (candidates who successfully pass this exam and have proper work experience will be awarded the FRM designation) or the inaugural Level I exam (candidates who successfully pass this exam will be eligible to sit for the Level II exam in the future).The 2009 FRM Study Guide has been designed for the transition to a two-level program and lists topics, readings, and test weights for the two-level program.Candidates opting to take the last full FRM exam will be tested on all topics and readings listed in this Study Guide from both Levels I and II.The full 2009 FRM exam will be a 5-hour (2 2.5-hour sessions), 140 multiple choice question exam.
From the Level I and II topics listed in this Study Guide, test weights and question allocation for the full 2009 FRM exam will be as follows:
Foundations of Risk Management . . . . . . . . . . . . . . . 10% 14 questions QuantitativeAnalysis . . . . . . . . . . . . . . . . . . . . . . . . . 10% 14 questions Financial Markets and Products . . . . . . . . . . . . . . . . . 15% 21 questions Valuation and Risk Models . . . . . . . . . . . . . . . . . . . . 15% 21 questions Market Risk Measurement and Management . . . . . . 10% 14 questions Credit Risk Measurement and Management . . . . . . . 10% 14 questions Operational and Integrated Risk Management . . . . . 10% 14 questions Risk Management and Investment Management . . . 10% 14 questions Current Issues in Financial Markets . . . . . . . . . . . . . . 10% 14 questions Candidates opting to take the inaugural Level I FRM exam will be tested on the Level I topics and readings listed in this Study Guide.The 2009 Level I FRM exam will be a 4-hour (2 2-hour sessions), 100 multiple choice question exam.
From the Level I topics listed in this Study Guide, test weights and question allocation for the 2009 Level I FRM exam will be as follows:
Foundations of Risk Management . . . . . . . . . . . . . . . 20% 20 questions QuantitativeAnalysis . . . . . . . . . . . . . . . . . . . . . . . . . 20% 20 questions Financial Markets and Products . . . . . . . . . . . . . . . . . 30% 30 questions Valuation and Risk Models . . . . . . . . . . . . . . . . . . . . 30% 30 questions
IMPORTANT NOTICE
2009 – FRMTransitions toTwo-Level Program
2009 Financial Risk Manager Examination Study Guide
GARP
®
© 2009 GlobalAssociation of Risk Professionals. All Rights Reserved.
1
TOPIC OUTLINE,READINGS,TESTWEIGHTINGS
The Study Guide sets forth primary topics and subtopics underthe five risk-related disciplines covered in the FRM exam.Thetopics were selected by the FRM Committee as topics that riskmanagers who work in practice today have to master.The topicsare reviewed yearly to ensure the FRM exam is kept timelyand relevant.
FRM ExaminationApproach
:The FRM exam is a practice-oriented examination. Its questionsare derived from a combination of theory, as set forth in thereadings, and “real-world” work experience. Candidates areexpected to understand risk management concepts andapproaches and how they would apply to a risk manager’sday-to-day activities.The FRM examination is also a comprehensive examination, test-ing a risk professional on a number of risk management conceptsand approaches. It is very rare that a risk manager will be facedwith an issue that can immediately be slotted into one category.In the real world, a risk manager must be able to identify anynumber of risk-related issues and be able to deal with themeffectively.
Readings
:Questions for the FRM examination are derived from the readingslisted under each topic outline.These readings were selected bythe FRM Committee to assist candidates in their review of the sub- jects covered by the exam. It is strongly suggested that candidatesreview these readings in depth prior to sitting for the exam.The
Financial Risk Manager Handbook, 5th edition
, by PhilippeJorion (NewYork: JohnWiley & Sons, 2009), covers most of theFRM examination topics at the appropriate level.
However,please note that the FRM Handbook was designed to helpcandidates review the material and is not a textbook.Alone,the FRM Handbook is not sufficient to prepare a candidateto pass the examination.
The FRM Handbook includes aninteractive CD with questions and answers from previous FRMexams to assist candidates with their exam preparation.
FRM Course Providers
:Some candidates may want to more formally review the materialswith FRM Course Providers.Course Providers are listed on theGARP website.GARP does not endorse any Course Provider butmerely lists them as a service to FRM candidates.
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