FRM Syllabus and Subjects
As soon as you begin your FRM Certification, you will encounter the discipline that will teach you advanced Risk Management abilities. The curriculum is divided into two parts FRM Exam I and FRM Exam II. FRM course is for the aspirants wishing to excel in their knowledge and expertise in the financial risk management sector.
Semester Wise FRM Syllabus
The FRM course curriculum is categorized into two parts: FRM Exam I and FRM Exam II. The FRM course cover a wide range of risk analysis and management topics and are divided into two parts. The exam-by-exam FRM subjects list is listed below:
FRM Syllabus - Exam I
The table below contains the list of FRM subjects in Exam I:
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Areas of Study |
Topics |
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Foundation of Risk Management (FRM) |
Basic Risk Types |
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Measurement and management tools |
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Creating Value with Risk Management |
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The role of Risk Management in Corporate Governance |
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Enterprise Risk Management |
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Financial Disaster and Risk Management Failure |
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The Capital Asset Pricing Model |
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Risk Adjusted Performance Measurement |
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Multifactor Models |
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Data Aggregation and Risk Reporting |
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Ethics and GRAP code of conduct |
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Quantitative Analysis (QA) |
Discreet and Continuous Probability Distributions |
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Estimating the parameters of distributions |
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Population and Sample Statistics |
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Bayesian Analysis |
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Statistical inference and hypothesis testing |
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Estimating correlation and volatility using EWMA and GARCH models |
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Volatility term structures |
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Correlations and copulas |
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Linear regression and single and multiple regressors |
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Time series analysis and forecasting |
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Simulation methods |
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Financial Markets and Products (FMP) |
Structure and functions of financial institutions |
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Structure and mechanics of OTC and exchange markets |
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Structure, mechanics, and valuation of forwards, futures, swaps and options |
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Hedging with derivatives |
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Interest rates and measures of interest rate sensitivity |
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Foreign exchange risk |
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Corporate bonds |
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Mortgage-backed securities |
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Valuation and Risk Models (VRM) |
Value-at-Risk (VaR) |
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Expected shortfall (ES) |
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Stress testing and scenario analysis |
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Option valuation |
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Fixed income valuation |
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Hedging |
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Country and sovereign risk models and management |
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External and internal credit ratings |
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Expected and unexpected losses |
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Operational risk |
FRM Syllabus - Exam II
The table below contains the list of FRM subjects in Exam II:
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Areas of Study |
Topics |
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Market Risk Measurement and Management (MR) |
VaR and other risk measures |
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Parametric and non-parametric methods of estimation |
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VaR mapping |
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Backtesting VaR |
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ES and other coherent risk measures |
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Modelling dependence: correlations and copulas |
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Term structure models of interest rates |
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Volatility: smiles and term structures |
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Credit Rist Measurement and Management (CR) |
Credit analysis |
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Default risk: quantitative methodologies |
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Expected and unexpected loss |
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Credit VaR |
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Counterparty risk |
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Credit derivatives |
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Structured finance and securitization |
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Operational and Integrated Risk Management (OR) |
Principles for sound operational risk management |
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ERM and enterprise-wide risk governance |
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IT infrastructure and data quality |
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Internal and external operational loss data |
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Methods of determining operational risk capital for regulatory purposes |
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Model risk and model validation |
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Extreme value theory (EVT) |
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Risk-adjusted return on capital (RAROC) |
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Economic capital frameworks and capital planning |
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Liquidity risk measurement and management |
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Failure mechanics of dealer banks |
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Stress testing banks |
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Third-party outsourcing risk |
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Risks related to money laundering and financing of terrorism |
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Regulation and the Basel Accords |
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Risk Management and Investment Management (IM) |
Factor theory |
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Portfolio construction Portfolio risk measures |
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Risk budgeting |
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Risk monitoring and performance measurement |
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Portfolio-based performance analysis |
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Hedge funds |
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Current Issues in Financial Markets (CI) |
Credit loss provisioning, IFRS 9/CECL |
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Machine learning and ‘big data’ |
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Central clearing and risk transformation |
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The failure of covered interest rate parity |
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FinTech credit |
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Corporate culture |
FRM Course Structure
An FRM syllabus is often divided into Exam I and Exam II. The FRM course curriculum takes up to one academic year to complete. The FRM course subjects teach not only theoretical knowledge but also practical and interpersonal skills that are necessary. The following is a breakdown of the FRM Certification course structure:
- One year
- Two Level Of Exam
- Seminars
- Internship
- Project Work
FRM Exam Pattern
The FRM exam consists of two-part with Part 1 consisting of 100 MCQs question and Part 2 consisting of 80 MCQs question. The duration of each exam is four hours. Below is a table highlighting the exam pattern:
|
Exam part |
Number of questions |
Type of questions |
Duration |
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Part I |
100 |
Multiple-choice questions (MCQs) |
4 hours |
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Part II |
80 |
FRM Teaching Methodology and Techniques
The teaching methods and techniques used for FRM Certification are unique. Students learn FRM subjects better when they are taught through practical lessons. To improve the effectiveness of instruction, FRM schools incorporate case studies, group projects, and other forms of action-based learning in addition to traditional lecture-based instruction. As a result, more knowledge about the theory and application of the course is acquired. The various teaching methods applied in the FRM Certification course are as follows:
- Practical /Project sessions
- Internship
- Seminars
- Regular Lectures
FRM Course Projects
The FRM Certification programme emphasises group projects and activities through project-based learning, which is a popular teaching method. Working on projects is primarily meant to make sure that students fully grasp the concepts. Some of the most typical financial risk management project topics include the following:
- A Study on Scope and Adequacy of Risk Rating Models.
- Analysis of Financial Statements for Credit Appraisal
- Comparative Analysis of ULIPs Vs Mutual Funds
- A Study on the Role of IT in enhancing banking services at The South Indian Bank Ltd
- A Study on Credit facilities under Consortium/ Multiple Banking
FRM Study Material
Prospective candidates can utilise the numerous study materials that GARP has supplied to effectively prepare for FRM. This contains a variety of sources and forms, including:
- Study materials for FRM: GARP publishes new study materials for FRM each year. After completing the FRM registration process, applications can download this study material.
- Practice examinations for the FRM are made available by GARP to aspiring FRM candidates for both Parts I and Part II.
- FRM Books: The topics listed in the FRM curriculum are covered by two sets of FRM books. Candidates can purchase these sets online. They are arranged into different sets for each of the two parts of the FRM exam. The FRM books are additionally accessible as ebooks.
FRM Books
Along with offering a basic understanding of the course, the GARP FRM books allow students to study their area of concentration in depth. Both online and offline access to the course textbooks is available to students. Before enrolling in the course, students should download the course information to fully understand the requirements so that they can make an informed choice.The following publications serve as the FRM course syllabus for the FRM Certification:
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Name of Book |
Author |
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The Essentials of Rist Management |
Michel Crouhy, Dan Gal, Robert Mark |
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A Practical Guide to Risk Management |
Thomas S. Coleman |
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Financial Risk Management: A Practitioner’s Guide to Managing Market and Credit Risk |
Steve L. Allen |
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Risk Management and Financial Institutions (Wiley Finance) |
John C. Hull |
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Practical Methods of Financial Engineering and Risk Management: Tools for Modern Financial Professionals |
Rupak Chatterjee |