FRM 2016

Introductions and Agenda

Chris Donohue, PhD Managing Director Research and Educational Programs GARP

Bill May SVP, FRM Program Manager Research and Educational Programs GARP

• GARP and its role in Risk Management

• Demand for Risk Managers

• The FRM Program

• Why it stands apart

• Structure and requirements

• The FRM Exam

• Registration information

• Support materials

• Questions and Answers

GARP: Creating A Culture of Risk Awareness

Administers the Financial Risk Manager (FRM®) and Energy Risk Professional (ERP®) exams; certifications recognized and valued by risk professionals worldwide.

Mission: To advance the risk profession through education, training and the promotion of best practices globally.

Founded 1996 Not-for profit 150,000 members 195 Countries

Globally recognized certification

Quality oversight Immediate application

Non-partisan industry connection

Forces Driving the Demand for Risk Managers

• Historical Drivers

• Globalization and integration of markets

• Increased product complexity

• Technological and methodological advances

• Regulation

• Market crises

• Rogue activity

• Recent accelerators

• Sovereign risk

• Commodity market volatility

• Rapid growth of regulation

• Increased focus on operational risk

• Heightened cyber risk

Financial Risk Manager (FRM®)

• Program Objective: Assess an individual’s ability to measure and manage risk in a real-world environment

• Administered by GARP since 1997

• FRM Committee comprised of senior risk managers and researchers

• Committee Chair: Professor René Stulz, Ohio State University

• Leading global professional designation for risk management

• Over 42,000 registrations in 2015

• Annual growth of 20% since 2005

• Candidates from all areas of financial services industry, including banking, asset management, and regulation

What sets the FRM apart?

MAINTENANCE ACCEPTANCE RELIABILITY

Oversight & governance

Aligned to industry practice & demand

Psychometric analysis

Industry acceptance Continuing

education and network

VALIDITY

2016 FRM Journey

30% - 30 Questions

20% - 20 Questions

30% - 30 Questions

20% - 20 Questions

25% - 20 Questions

10% - 8 Questions

15% - 12 Questions

25% - 20 Questions

25% - 20 Questions

Foundations of Risk Management

Quantitative Analysis

Financial Markets and Products

Valuation and Risk Models

Market Risk Measurement and Management

Credit Risk Measurement and Management

Operational and Integrated Risk Management

Risk Management in Investment Management

Current Issues in Financial Markets

FRM Exam Part I: Tools used to assess risk (4 hours, 100 Multiple Choice Questions)

FRM Exam Part II: Practical application of those tools (4 hours, 80 Multiple Choice Questions)

2 years relevant work experience

Certified Financial Risk Manager FRM ®

Voluntary CPD 40 hours/2 years

FRM Part I

• Foundations of Risk Management • Provides an introduction to risk management, covering basic risk types, risk-

adjusted performance, corporate governance, ERM, best practices, and how risk management can add value to an organization.

• Quantitative Analysis • Covers key quantitative principles and techniques used in risk management,

including probabilities and statistics, regression analysis, trend forecasting, and simulation methods.

• Financial Markets and Products • Explains commonly traded financial products such as options, futures, swaps,

and commodities. Covers the markets they trade in, their risk characteristics, and relevant hedging techniques and strategies.

• Valuation and Risk Models • Explains valuation techniques, key risk metrics, and issues that arise in risk

modeling. Some key areas covered include option and fixed income valuation, VaR and Expected Shortfall, stress testing, and capital modeling.

FRM Part II

• Market Risk Management and Measurement • Provides greater depth on techniques used to measure and manage market risk, including

a more extensive discussion on VaR, VaR mapping and backtesting, dependence modeling (correlations and copulas), interest rate modeling, and volatility modeling.

• Credit Risk Management and Measurement • More extensive treatment of methods used to measure and manage credit risk including

credit analysis, internal and external rating models, counterparty credit risk, structured finance, and securitization.

• Operational and Integrated Risk Management • Covers operational risk management techniques, economic capital modeling, and

regulatory compliance. Topics include modeling loss data, model risk, liquidity risk, systemic risk, Basel regulations, economic capital planning, and stress testing.

• Risk Management and Investment Management • Explains methods used to measure and manage risk in the investment industry, including

portfolio construction and performance analysis, risk budgeting, hedge funds, and due diligence.

• Current Issues in Financial Markets • Explores topics of current and increasing relevance to risk management. In 2016, this

includes liquidity and funding issues, use and misuse of benchmark interest rates, trends in stress testing, and cybersecurity risk.

What’s New in 2016?

For the FRM, increased coverage of:

• Simulation methods

• Central counterparties

• Country risk

• Retail credit and securitization

• Current issues – cyber risk, liquidity risk, regulatory stress testing

Program Registration Timeline and Fees

• Enrollment fee includes 1-year complimentary GARP membership

• Candidates can elect to take both Part I and Part II on the same date, however, candidate must pass Part I to have Part II exam scored

• FRM and ERP Exams are offered at more than 90 sites around the world

• Deferral policy

Certification Program Enrollment and Exam Registration Fees

FRM May 21, 2016 Nov 19, 2016

Enrollment Fee US$ 300 Valid for 4 Years Valid for 4 Years

Early

Registration* US$ 350 Dec 1, 2015 – Jan 31, 2016 May 1, 2016 – Jul 31, 2016

Standard

Registration* US$ 475 Feb 1, 2016 – Feb 29, 2016 Aug 1, 2016 – Aug 31, 2016

Late

Registration* US$ 650 Mar 1, 2016 - Apr 15, 2016 Sep 1, 2016 – Oct 15, 2016

* Fees per Part I & II Exam

Resources and Support for Exam Preparation

SUPPORT FOR YOUR JOURNEY

Hard cover books E-books (Pricing available on GARP website)

FREE: Exam Study Guides Exam Study Guide Changes Learning Objectives Practice Exams

Exam Prep Providers Local Study Groups GARP Chapters

GARP Website Social media

.COM

Certification

• Demonstrate your knowledge and commitment • Become part of an elite group • Stand out to employers • Be part of the solution

Questions?

Creating a culture of

risk awareness®

Global Association of

Risk Professionals

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14th Floor

Jersey City, New Jersey 07310

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U.K.

+ 44 (0) 20 7397 9630

www.garp.org

© 2015 Global Association of Risk Professionals. All rights reserved.

About GARP | The Global Association of Risk Professionals (GARP) is a not-for-profit global membership organization dedicated to preparing

professionals and organizations to make better informed risk decisions. Membership represents over 150,000 risk management practitioners and

researchers from banks, investment management firms, government agencies, academic institutions, and corporations from more than 195

countries and territories. GARP administers the Financial Risk Manager (FRM®) and the Energy Risk Professional (ERP®) exams; certifications

recognized by risk professionals worldwide. GARP also helps advance the role of risk management via comprehensive professional education and

training for professionals of all levels. www.garp.org