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1. Becoming a Financial Risk Manager
Using the FRM® to Build and
Advance Your Career
Global Association of Risk Professionals
June 2011

2. Introductions and Agenda
• Moderator
• Chris Donohue, Ph.D.
• Growth of the risk management
• Managing Director, GARP Research profession
and Educational Programs
• Panelists • Overview of the FRM Program
• Prof. René Stulz
• Everett D. Reese Chair of Banking • Significance of the FRM designation
and Monetary Economics, Ohio State
University • What is covered on the FRM Exam
• Chairman of the FRM Committee;
Member, GARP Board of Trustees
• Preparing for the FRM Exam
• Michelle McCarthy
• Managing Director, Director of Risk
Management, Nuveen Investment
• Registration Information
• Member of the FRM Committee;
Member, GARP Board of Trustees • Q&A
• Masao Matsuda, Ph.D., FRM®,
CAIA • Sample FRM Questions
• Owner, Crossgates Investment
Management
• Bill May
• SVP, FRM Program Manager, GARP
Research and Educational Programs
2

3. 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
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.
3

4. 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
10-year job growth of 24%.”
Source CNN Money
4

5. 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
profit
• 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

6. 2011 FRM Committee
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
6

7. The FRM Program
Part I Exam
(4 hours, 100 MCQ) Voluntary
Demonstrate two Certified
Continuing
years relevant Financial Risk
Education
work experience Manager (FRM®)
Part II Exam 40 hours/2 years
(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
• 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%)
7

8. The FRM Exam Process
Download Register Sit for Part 1 Sit for Part 2
2011 FRM And Exam Exam
Study Guide Prepare
• Outlines topics and • Register on GARP • Developed with input • Developed with input
readings for Part 1 and website: from FRM Committee, from FRM Committee,
Part 2 Exams www.garp.org/frm certified FRMs and certified FRMs and
• Developed annually by • Leverage candidate other risk professionals other risk professionals
FRM Committee resources, including • 4 Hour exam, 100 • 4 Hour exam, 80
• Insight from Certified practice exams, books, Multiple Choice Multiple Choice
FRMs and risk course packs, FRM Questions Questions
community training providers • November 19, 2011, • November 19, 2011,
(more later) Morning Session Afternoon Session
8

9. 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 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%
Part I 55.2% 52.5% 39.3%
Part II 54.0% 54.9%
9

10. Acceptance of the FRM Program
646 organizations have five or more FRM Candidates Top 20 companies with the most FRM Holders
• Represent every major banking institution,
government regulator, consulting firm and financial
services institution around the world
• Average annual growth of 30%
10

11. Global Participation in the FRM Program
Significant growth throughout the world since 2007
FRM Registration Growth Since 2007
350.0%
300.0%
250.0%
200.0%
150.0%
2010
100.0%
2011 (Projected)
50.0%
0.0%
11

12. Diversity of FRM Candidates
Distribution of FRM Candidates – May 2011
Banking
Financial Services (non-bank)
Academic
Risk & Technology Vendors
Consulting
Insurance
Other
12

13. 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
13

14. 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
• 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
14

15. FRM Registration Timeline and Fees
Program Enrollment and Exam Registration Fee
Part I Part II
Program Enrollment Fee (valid for 4 years) 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
year
• 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
15

16. November 2011 FRM Exam Sites
Africa Jordan, Amman USA, California, San Francisco Germany, Munich
Kenya, Nairobi Korea, Seoul USA, Colorado, Denver Iceland, Reykjavik
Nigeria, Lagos Kuwait, Safat USA, D.C., Washington Ireland, Dublin
South Africa, Cape Town Lebanon, Beirut USA, Florida, Tampa Italy, Milan
South Africa, Johannesburg Malaysia, Kuala Lumpur USA, Georgia, Atlanta Luxembourg
South Africa, Vanderbijlpark Oman, Muscat USA, Illinois, Chicago Poland, Warsaw
Pakistan, Karachi USA, Louisiana, New Orleans Russian Federation, Moscow
Asia Philippines, Manila USA, Massachusetts, Waltham Spain, Barcelona
China, Beijing Saudi Arabia, Riyadh USA, Michigan, Ann Arbor Spain, Madrid
China, Chengdu Singapore USA, New York, New York Sweden, Stockholm
China, Guangzhou Taiwan, Taipei USA, NJ, New Brunswick Switzerland, Geneva
China, Hong Kong Thailand, Bangkok USA, North Carolina, Charlotte Switzerland, Zurich
China, Nanjing United Arab Emirates, Dubai USA, Ohio, Columbus The Netherlands, Amsterdam
China, Shanghai USA, Pennsylvania, Philadelphia The Netherlands, Utrecht
China, Wuhan Americas USA, Texas, Dallas Turkey, Istanbul
India, Bangalore Bermuda, Paget USA, Texas, Houston Ukraine, Kiev
India, Calicut, Kerala Brazil, Sao Paulo USA, Washington, Seattle UK, England, London
India, Chennai Canada, BC, Surrey UK, Scotland, Edinburgh
India, Hyderabad Canada, Ontario, Toronto Europe
India, Kolkata Canada, Quebec, Montreal Austria, Vienna Oceania
India, Mumbai Honduras, Tegucigalpa Belgium, Brussels Australia, Melbourne
India, New Delhi West Indies, Jamaica Bulgaria, Sofia Australia, Sydney
Indonesia, Jakarta Mexico, Mexico City Czech Republic, Prague New Zealand, Auckland
Israel, Tel Aviv (Sunday) Peru, Lima France, Paris
Japan, Tokyo USA, California, Los Angeles Germany, Frankfurt
16

17. 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
17

18. Q&A
• Please enter questions into the text box on the screen
and submit
18

19. 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 - May 2011
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
< 100 hours 100-150 150-200 250
200-250 250-300 300-350 350-400 400 hours
hours hours hours hours hours hours
19

20. Learning More and Connecting with GARP
• Learn more about the FRM Program, including Exam
preparation resources at:
www.garp.org/frm Email: frm@garp.com
• 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
20

21. 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 p
profit 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 comprehens professional education and training for
comprehensive
professionals of all levels. www.garp.org.
© 2011 Global Association of Risk Professionals. All rights reserved.