becoming a financial risk manager
DESCRIPTION
Using the FRM® to Build your career. For more information on this video, and to sign-up for our 10-day Free CFA Course click here:-http://www.edupristine.com/courses/frm-garp-financial-risk-manager/To know more about these trainings, do contact us at -M: +91 80800 05533TRANSCRIPT
Becoming a Financial Risk ManagerUsing the FRM® to Build and
Advance Your Career
Global Association of Risk Professionals
June 2011
Becoming a Financial Risk Manager
Introductions and Agenda
• Growth of the risk management
profession
• Overview of the FRM Program
• Significance of the FRM designation
• What is covered on the FRM Exam
• Moderator
• Chris Donohue, Ph.D.
• Managing Director, GARP Research and Educational Programs
• Panelists
• Prof. René Stulz
• Everett D. Reese Chair of Banking and Monetary Economics, Ohio State University
2
• What is covered on the FRM Exam
• Preparing for the FRM Exam
• Registration Information
• Q&A
• Sample FRM Questions
• Chairman of the FRM Committee; Member, GARP Board of Trustees
• Michelle McCarthy
• Managing Director, Director of Risk Management, Nuveen Investment
• Member of the FRM Committee; Member, GARP Board of Trustees
• Masao Matsuda, Ph.D., FRM®, CAIA
• Owner, Crossgates Investment Management
• Bill May
• SVP, FRM Program Manager, GARP Research and Educational Programs
Introductions and Agenda
Growth of the risk management
profession
Overview of the FRM Program
Significance of the FRM designation
What is covered on the FRM ExamWhat is covered on the FRM Exam
Preparing for the FRM Exam
Registration Information
Q&A
Sample FRM Questions
Emergence of the Risk Management Profession
• Risk management profession only loosely existed 20 years ago
• Drivers of risk management as a profession
• Notable risk management failures
• Orange County, LTCM, Barings, Société
• Financial innovation
• Growth in use and availability of derivatives
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• Growth in use and availability of derivatives
• Risk measurement techniques
• Late 80s – early 90s – JP Morgan developed Value
• Computational power
• Ability to gather position data and measure risk in a timely manner
• Best practice recommendations
• Group of 30 report
• Regulatory Initiatives
• International – Basel I, II, III
• National – Sox, Dodd-Frank, FSA, etc.
Emergence of the Risk Management Profession
Risk management profession only loosely existed 20 years ago
Drivers of risk management as a profession
Société Générale, Credit crisis
Growth in use and availability of derivatives – 80s and beyondGrowth in use and availability of derivatives – 80s and beyond
JP Morgan developed Value-at-Risk to quantify expected loss
Ability to gather position data and measure risk in a timely manner
Financial Risk Management Skills are in High Demand
• Demand for financial risk managers is strong…
4
Source: Indeed.com
• And is expected to remain strong…
• “Risk Management ranked #14 in the CNN Money and
100 careers with great pay and growth prospects, expecting 10
Source CNN Money
Financial Risk Management Skills are in High Demand
Demand for financial risk managers is strong…
“Risk Management ranked #14 in the CNN Money and PayScale.com’s 2010 list of top
100 careers with great pay and growth prospects, expecting 10-year job growth of 24%.”
GARP and the FRM
As the leading professional association for risk managers, GARP's
mission is to advance the risk profession through education, training
and the promotion of best practices globally.
• Not-for-profit association, founded in 1996• Over 150,000 members from 195 countries and territories
• Governed by Board of Trustees comprised of leading risk executives and
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• Governed by Board of Trustees comprised of leading risk executives and researchers
• Offices in Jersey City, NJ and London
• Financial Risk Manager (FRM)• Leading global professional designation program for risk management
• Administered by GARP since 1997
• Program objective — assess an individual’s ability to measure and manage risk in a real-world environment
• FRM Committee comprised of senior risk managers and researchers oversee program
As the leading professional association for risk managers, GARP's
mission is to advance the risk profession through education, training
and the promotion of best practices globally.
profit association, founded in 1996Over 150,000 members from 195 countries and territories
Governed by Board of Trustees comprised of leading risk executives and Governed by Board of Trustees comprised of leading risk executives and
Leading global professional designation program for risk management
assess an individual’s ability to measure and manage risk
FRM Committee comprised of senior risk managers and researchers oversee
2011 FRM Committee
Dr. René Stulz (Chairman) Everett D. Reese Chair of Banking and Monetary Economics,
Rich Apostolik President and Chief Executive Officer, GARP
Richard Brandt Risk Oversight, Citibank
Juan Carlos Garcia Cespedes Head of Risk Methodologies, BBVA
Dr. Chris Donohue Managing Director, Head of GARP Research Center
Hervé Geny Global Head of Risk, ICAP
Dr. Satyajit Karnik, FRM Fordham University
Kai Leifert, FRM Regional CRO, Northern Trust Global Investments
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Kai Leifert, FRM Regional CRO, Northern Trust Global Investments
Steve Lerit Senior Vice President, Bank of America
William May Senior Vice President, GARP Research Center
Michelle McCarthy Managing Director, Director of Risk Management, Nuveen Investments
Michael B. Miller, FRM Head of Risk Management, Tremblant Capital Group
Ezra Uzi Moualem, FRM Vice President, The Financial Institute of Israel & Managing Director, ZRisk
Dr. Victor Ng Vice President, Head of Risk Modeling
Dr. Elliot Noma Managing Director, Garrett Asset Management
Liu Ruixia Deputy General Manager, Risk Management, Industrial and Commercial Bank of China
Robert Scanlon Group Chief Credit Officer, Standard Chartered Bank
Dr. Til Schuermann Partner, Oliver Wyman
Serge Sverdlov Senior Quantitative Manager, Microsoft Corporation
Alan Weindorf Treasury, Visa
D. Reese Chair of Banking and Monetary Economics, Ohio State University
President and Chief Executive Officer, GARP
Head of Risk Methodologies, BBVA
Managing Director, Head of GARP Research Center
Regional CRO, Northern Trust Global InvestmentsRegional CRO, Northern Trust Global Investments
of America
Senior Vice President, GARP Research Center
Managing Director, Director of Risk Management, Nuveen Investments
Head of Risk Management, Tremblant Capital Group
Vice President, The Financial Institute of Israel & Managing Director, ZRisk
Vice President, Head of Risk Modeling - Firmwide Risk, Goldman Sachs
Managing Director, Garrett Asset Management
Deputy General Manager, Risk Management, Industrial and Commercial Bank of China
Group Chief Credit Officer, Standard Chartered Bank
Senior Quantitative Manager, Microsoft Corporation
The FRMProgram
• Two-part program
Part II Exam
(4 hours, 80 MCQ)
Part I Exam
(4 hours, 100 MCQ)Demonstrate two
years relevant
work experience
7
• Two-part program• Part I curriculum covers the tools used to assess risk
• Foundations of Risk Management (20%)
• Quantitative Analysis (20%)
• Financial Markets and Products (30%)
• Valuation and Risk Models (30%)
• Part II curriculum focuses on the practical application of those tools
• Market Risk Measurement and Management (25%)
• Credit Risk Measurement and Management (25%)
• Operational and Integrated Risk Management (25%)
• Risk Management in Investment Management (15%)
• Current Issues in Financial Markets (10%)
Certified
Financial Risk
Manager (FRM®)
Voluntary
Continuing
Education
40 hours/2 years
Part I curriculum covers the tools used to assess risk
Part II curriculum focuses on the practical application of those tools
Risk Management in Investment Management (15%)
The FRMExam Process
Download
2011 FRM
Study Guide
Register
And
Prepare
8
• Outlines topics and
readings for Part 1 and
Part 2 Exams
• Developed annually by
FRM Committee
• Insight from Certified
FRMs and risk
community
• Register on GARP
website:
www.garp.org/frm
• Leverage candidate
resources, including
practice exams, books,
course packs, FRM
training providers
(more later)
Sit for Part 1
Exam
Sit for Part 2
Exam
practice exams, books,
• Developed with input
from FRM Committee,
certified FRMs and
other risk professionals
• 4 Hour exam, 100
Multiple Choice
Questions
• November 19, 2011,
Morning Session
• Developed with input
from FRM Committee,
certified FRMs and
other risk professionals
• 4 Hour exam, 80
Multiple Choice
Questions
• November 19, 2011,
Afternoon Session
Growth of the FRMProgram
• Average growth of 34% in registered candidates per year since 2000
• 2010 registrations represent over 4,447 firms globally
• Exams offered in 92 locations around the world in 2010
• Registrants come from every major financial institution, consulting
firm, regulatory body, and academic institution
• 100,000th FRM candidate registered for the November 2010 exam
Currently, there are over 20,000 Certified FRMs
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FRM Registrations
Currently, there are over 20,000 Certified FRMs
Full Exam 37.0% 42.9% 54.0% 53.3% 62.7% 58.9% 53.8%
Part I
Part II
Pass Rate
Program
Average growth of 34% in registered candidates per year since 2000
2010 registrations represent over 4,447 firms globally
Exams offered in 92 locations around the world in 2010
Registrants come from every major financial institution, consulting
FRM candidate registered for the November 2010 exam
20,000 Certified FRMs20,000 Certified FRMs
52.5% 44.0% 44.8% 44.4% 42.4% 44.1%
55.2% 52.5% 39.3%
54.0% 54.9%
Acceptance of the FRMProgram
• Represent every major banking institution,
government regulator, consulting firm and financial
services institution around the world
• Average annual growth of 30%
646 organizations have five or more FRM Candidates
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Program
government regulator, consulting firm and financial
Top 20 companies with the most FRM Holders
Global Participation in the FRM
Significant growth throughout the world since 2007
250.0%
300.0%
350.0%
FRM Registration Growth Since 2007
11
0.0%
50.0%
100.0%
150.0%
200.0%
Global Participation in the FRMProgram
Significant growth throughout the world since 2007
FRM Registration Growth Since 2007
2010
2011 (Projected)
Diversity of FRMCandidates
Distribution of FRM Candidates
12
Candidates
Distribution of FRM Candidates – May 2011
Banking
Financial Services (non-bank)Financial Services (non-bank)
Academic
Risk & Technology Vendors
Consulting
Insurance
Other
Strengthening the FRM Program
• FRM Part I Books with Pearson
• Available this month (May 2011)
• Global Job Task Analysis
• A formal study of the current knowledge, skill and
abilities required to perform the job of financial
risk manager globally
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risk manager globally
• To validate the appropriateness of the current FRM
examination and to guide the design of future FRM
program
• University Partnerships
• Working with universities globally to develop and
enhance risk curricula and to directly embed the
FRM examination into academic programs
• Continuing Professional Education
• Launched in late 2010
Program
A formal study of the current knowledge, skill and
abilities required to perform the job of financial
To validate the appropriateness of the current FRM
examination and to guide the design of future FRM
Working with universities globally to develop and
enhance risk curricula and to directly embed the
FRM examination into academic programs
Value of the FRM Program
• Knowledge
• Career Enhancement/Advancement
• 85% of certified FRMs surveyed responded that they would “certainly/more
likely” hire a candidate with the FRM designation over a candidate without
the credential
• Samples from GARP’s Career Center
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• Samples from GARP’s Career Center
• Senior Risk Officer
• Job Requirement: FRM Certification
• Senior Derivatives Analyst
• Job Requirement: Progress or completion of CFA and/or FRM a plus
• Senior Analyst, Market Risk
• Qualifications: CFA/FRM
• Director – Risk Ratings
• Preferred Qualifications: Professional qualifications (CFA, FRM) a plus
• Professional Recognition
Value of the FRM Program
85% of certified FRMs surveyed responded that they would “certainly/more
likely” hire a candidate with the FRM designation over a candidate without
Samples from GARP’s Career CenterSamples from GARP’s Career Center
Job Requirement: Progress or completion of CFA and/or FRM a plus
Professional qualifications (CFA, FRM) a plus
FRM Registration Timeline and Fees
Program Enrollment and Exam Registration Fee
Program Enrollment Fee (valid for 4 years)
June 1, 2011 – July 31, 2011
August 1, 2011 – August 31, 2011
September 1, 2011 – October 15, 2011
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September 1, 2011 – October 15, 2011
• Enrollment fee includes 1-year complimentary GARP membership
• Candidates can elect to take both Part I and Part II in November
• However, candidate must pass Part I to have Part II exam scored
• Deferral policy
• Questions? Contact [email protected]
FRM Registration Timeline and Fees
Program Enrollment and Exam Registration Fee
Part I Part II
Fee (valid for 4 years) USD 300
USD 350 USD 350
USD 475 USD 475
October 15, 2011 USD 650 USD 650October 15, 2011 USD 650 USD 650
year complimentary GARP membership
Candidates can elect to take both Part I and Part II in November
However, candidate must pass Part I to have Part II exam scored
November 2011 FRM Exam Sites
Africa Jordan, Amman
Kenya, Nairobi Korea, Seoul
Nigeria, Lagos Kuwait, Safat
South Africa, Cape Town Lebanon, Beirut
South Africa, Johannesburg Malaysia, Kuala Lumpur
South Africa, Vanderbijlpark Oman, Muscat
Pakistan, Karachi
Asia Philippines, Manila
China, Beijing Saudi Arabia, Riyadh
China, Chengdu Singapore
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China, Chengdu Singapore
China, Guangzhou Taiwan, Taipei
China, Hong Kong Thailand, Bangkok
China, Nanjing United Arab Emirates, Dubai
China, Shanghai
China, Wuhan Americas
India, Bangalore Bermuda, Paget
India, Calicut, Kerala Brazil, Sao Paulo
India, Chennai Canada, BC, Surrey
India, Hyderabad Canada, Ontario, Toronto
India, Kolkata Canada, Quebec, Montreal
India, Mumbai Honduras, Tegucigalpa
India, New Delhi West Indies, Jamaica
Indonesia, Jakarta Mexico, Mexico City
Israel, Tel Aviv (Sunday) Peru, Lima
Japan, Tokyo USA, California, Los Angeles
November 2011 FRM Exam Sites
USA, California, San Francisco Germany, Munich
USA, Colorado, Denver Iceland, Reykjavik
USA, D.C., Washington Ireland, Dublin
USA, Florida, Tampa Italy, Milan
USA, Georgia, Atlanta Luxembourg
USA, Illinois, Chicago Poland, Warsaw
USA, Louisiana, New Orleans Russian Federation, Moscow
USA, Massachusetts, Waltham Spain, Barcelona
USA, Michigan, Ann Arbor Spain, Madrid
USA, New York, New York Sweden, StockholmUSA, New York, New York Sweden, Stockholm
USA, NJ, New Brunswick Switzerland, Geneva
USA, North Carolina, Charlotte Switzerland, Zurich
USA, Ohio, Columbus The Netherlands, Amsterdam
USA, Pennsylvania, Philadelphia The Netherlands, Utrecht
USA, Texas, Dallas Turkey, Istanbul
USA, Texas, Houston Ukraine, Kiev
USA, Washington, Seattle UK, England, London
UK, Scotland, Edinburgh
Europe
Austria, Vienna Oceania
Belgium, Brussels Australia, Melbourne
Bulgaria, Sofia Australia, Sydney
Czech Republic, Prague New Zealand, Auckland
France, Paris
Germany, Frankfurt
FRM Candidate Resources
• 2011 FRM Study Guide (Free)
• 2011 FRM AIMS (Free)
• 2011 FRM Practice Exams (Free)
• 2011 FRM Part 1 Books ($250 + shipping)
• 2011 FRM Part 2 Course Pack
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• 2011 FRM Part 2 Course Pack
($370 + shipping)
• FRM Handbook ($122.50 + shipping)
• FRM Training Course Providers
• Local Study Groups
• GARP Website
• GARP Chapters
• Social Media: LinkedIn, Facebook
FRM Candidate Resources
2011 FRM Practice Exams (Free)
2011 FRM Part 1 Books ($250 + shipping)
2011 FRM Part 2 Course Pack 2011 FRM Part 2 Course Pack
FRM Handbook ($122.50 + shipping)
FRM Training Course Providers
Q & A
• Please enter questions into the text box on the screen
and submit
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Please enter questions into the text box on the screen
Q & A – Previously Submitted Questions
• How does the FRM compare to other certifications?
• How applicable is the FRM to risk management positions outside
of banking?
• How many hours of prep time is needed to pass the FRM exams?
Distribution of FRM Preparation Time
19
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
< 100 hours 100-150 hours
150-200 hours
200-250 hours
Distribution of FRM Preparation Time
Previously Submitted Questions
How does the FRM compare to other certifications?
How applicable is the FRM to risk management positions outside
How many hours of prep time is needed to pass the FRM exams?
Distribution of FRM Preparation Time - May 2011
250 250-300 hours
300-350 hours
350-400 hours
400 hours
Distribution of FRM Preparation Time - May 2011
Learning More and Connecting with GARP
• Learn more about the FRM Program, including Exam
preparation resources at:
www.garp.org/frm
• Connect with other Certified FRMs and FRM Exam
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• Connect with other Certified FRMs and FRM Exam
candidates at:
www.facebook.com/garpfrm
www.linkedin.com – search via term “GARP LinkedIn”
• Follow GARP on Twitter:
@GARP_Risk
Learning More and Connecting with GARP
Learn more about the FRM Program, including Exam
Email: [email protected]
Connect with other Certified FRMs and FRM Exam Connect with other Certified FRMs and FRM Exam
www.facebook.com/garpfrm
search via term “GARP LinkedIn”
Creating a culture of
risk awarenessTM
Global Association of
Risk Professionals
111 Town Square Place
Suite 1215
Jersey City, New Jersey 07310
USA
+ 1 201.719.7210
Minster House, 1st Floor
42 Mincing Lane42 Mincing Lane
London EC3R 7AE
UK
+ 44 (0) 20 7397 9631
www.garp.org
© 2011 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 p
better informed risk decisions. Membership represents over 150,000 risk management practitioners and researchers from banks,
academic institutions, and corporations from more than 195 countries. GARP administers the Financial Risk Manager (FRM
certifications recognized by risk professionals worldwide. GARP also helps advance the role of risk management via comprehens
professionals of all levels. www.garp.org.
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. 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 comprehensiveprofessional education and training for