Becoming a Financial Risk Manager
Using the FRM® to Build and
Advance Your Career
William May
Senior Vice President
FRM Program Manager
Global Association of Risk Professionals
September 2011
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 Générale, Credit crisis
• Financial innovation
• Growth in use and availability of derivatives – 80s and beyond
• Risk measurement techniques
• Late 80s – early 90s – JP Morgan developed Value-at-Risk to quantify expected loss
• 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.
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Why would one consider becoming an FRM?
• The risk management profession has seen considerable growth over the past 15
years, fueled by the complexity of financial products, increased regulation, and
recent notable institutional failures.
• Like other career paths in finance, having an advanced degree and certification in
financial risk management helps to increase your career potential.
• FRM holders have achieved positions such as Chief Risk Officer, Senior Risk
Analyst, Head of Operational Risk, and Director, Investment Risk Management,
to name a few.
• Earning an FRM designation not only broadens your skill set, it demonstrates a
standardized level of industry knowledge, making you a recognized leader in
financial risk management.
3
Financial Risk Management Skills are in High Demand
• Demand for financial risk managers is strong…
Source: Indeed.com
• And is expected to remain 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%.”
Source CNN Money
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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
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
5
2011 FRM Committee
6
Dr. René Stulz (Chairman)
Everett D. Reese Chair of Banking and Monetary Economics, Ohio State University
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
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 - Firmwide Risk, Goldman Sachs
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
The FRM Program
Part I Exam
(4 hours, 100 MCQ)
Part II Exam
Demonstrate two
years relevant
work experience
Certified
Financial Risk
Manager (FRM®)
(4 hours, 80 MCQ)
• 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
7
•
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%)
Voluntary
Continuing
Education
40 hours/2 years
Growth of the FRM 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
firm, regulatory body, and academic institution
• 100,000th FRM candidate registered for the November 2010 exam
Currently, there are over 20,000 Certified FRMs
FRM Registrations
Pass Rate
Full Exam
Part I
37.0%
42.9%
54.0%
53.3%
62.7%
58.9%
53.8%
52.5%
44.0%
44.8%
44.4%
42.4%
44.1%
55.2%
Part II
52.5% 39.3%
54.0% 54.9%
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Acceptance of the FRM Program
646 organizations have five or more FRM Candidates
• Represent every major banking institution,
government regulator, consulting firm and financial
services institution around the world
• Average annual growth of 30%
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Top 20 companies with the most FRM Holders
Global Participation in the FRM Program
Significant growth throughout the world since 2007
FRM Registration Growth Since 2007
350%
300%
250%
200%
150%
2010
100%
50%
0%
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2011 (Projected)
Diversity of FRM Candidates
Distribution of FRM Candidates – May 2011
Banking
Financial Services (non-bank)
Academic
Risk & Technology Vendors
Consulting
Insurance
Other
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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
• 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
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The FRM Exam Process
Download
2011 FRM
Study Guide
• Outlines topics and
readings for Part 1 and
Part 2 Exams
• Developed annually by
FRM Committee
• Insight from Certified
FRMs and risk
community
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Register
And
Prepare
• 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
• Developed with input
from FRM Committee,
certified FRMs and
other risk professionals
• 4 Hour exam, 100
Multiple Choice
Questions
• November 19, 2011,
Morning Session
Sit for Part 2
Exam
• Developed with input
from FRM Committee,
certified FRMs and
other risk professionals
• 4 Hour exam, 80
Multiple Choice
Questions
• November 19, 2011,
Afternoon Session
FRM Registration Timeline and Fees
Program Enrollment and Exam Registration Fee
Part I
Program Enrollment Fee (valid for 4 years)
Part II
USD 300
June 1, 2011 – July 31, 2011
USD 350
USD 350
August 1, 2011 – August 31, 2011
USD 475
USD 475
September 1, 2011 – October 15, 2011
USD 650
USD 650
• 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 frm@garp.com
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November 2011 FRM Exam Sites
Africa
Kenya, Nairobi
Nigeria, Lagos
South Africa, Cape Town
South Africa, Johannesburg
South Africa, Vanderbijlpark
Asia
China, Beijing
China, Chengdu
China, Guangzhou
China, Hong Kong
China, Nanjing
China, Shanghai
China, Wuhan
India, Bangalore
India, Calicut, Kerala
India, Chennai
India, Hyderabad
India, Kolkata
India, Mumbai
India, New Delhi
Indonesia, Jakarta
Israel, Tel Aviv (Sunday)
Japan, Tokyo
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Jordan, Amman
Korea, Seoul
Kuwait, Safat
Lebanon, Beirut
Malaysia, Kuala Lumpur
Oman, Muscat
Pakistan, Karachi
Philippines, Manila
Saudi Arabia, Riyadh
Singapore
Taiwan, Taipei
Thailand, Bangkok
United Arab Emirates, Dubai
Americas
Bermuda, Paget
Brazil, Sao Paulo
Canada, BC, Surrey
Canada, Ontario, Toronto
Canada, Quebec, Montreal
Honduras, Tegucigalpa
West Indies, Jamaica
Mexico, Mexico City
Peru, Lima
USA, California, Los Angeles
USA, California, San Francisco
USA, Colorado, Denver
USA, D.C., Washington
USA, Florida, Tampa
USA, Georgia, Atlanta
USA, Illinois, Chicago
USA, Louisiana, New Orleans
USA, Massachusetts, Waltham
USA, Michigan, Ann Arbor
USA, New York, New York
USA, NJ, New Brunswick
USA, North Carolina, Charlotte
USA, Ohio, Columbus
USA, Pennsylvania, Philadelphia
USA, Texas, Dallas
USA, Texas, Houston
USA, Washington, Seattle
Europe
Austria, Vienna
Belgium, Brussels
Bulgaria, Sofia
Czech Republic, Prague
France, Paris
Germany, Frankfurt
Germany, Munich
Iceland, Reykjavik
Ireland, Dublin
Italy, Milan
Luxembourg
Poland, Warsaw
Russian Federation, Moscow
Spain, Barcelona
Spain, Madrid
Sweden, Stockholm
Switzerland, Geneva
Switzerland, Zurich
The Netherlands, Amsterdam
The Netherlands, Utrecht
Turkey, Istanbul
Ukraine, Kiev
UK, England, London
UK, Scotland, Edinburgh
Oceania
Australia, Melbourne
Australia, Sydney
New Zealand, Auckland
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
($370 + shipping)
• FRM Handbook ($122.50 + shipping)
• FRM Training Course Providers
• Local Study Groups
• GARP Website
• GARP Chapters
• Social Media: LinkedIn, Facebook
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Academic Outreach
University Chapter Network
• 35 chapters in 17 countries (from Cornell to Kenya and back again)
• University Chapters give students a forum through which they can learn,
communicate their ideas, and network with their peers and practitioners
• Participation in University Chapter meetings gives students the chance to:
–Better understand professional life and what to expect in the workplace
–Be better equipped for the career opportunities that lie ahead for them in the risk
management community
• University Chapters give the practitioner community a forum to interact with and
inform the academic community about relevant trends and issues in risk
management
• Partnership for Risk Education
17
Q &A
18
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 Lane
London EC3R 7AE
UK
+ 44 (0) 20 7397 9631
www.garp.org
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. 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.
© 2011 Global Association of Risk Professionals. All rights reserved.