Becoming a Financial Risk ManagerUsing the FRM® to Build andAdvance Your Career

William MaySenior Vice PresidentFRM Program ManagerGlobal Association of Risk ProfessionalsSeptember 2011

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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.

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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

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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

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The FRM Program

• 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%)

Part II Exam(4 hours, 80 MCQ)

Part I Exam(4 hours, 100 MCQ)

Demonstrate two years relevant work experience

CertifiedFinancial Risk Manager (FRM®)

Voluntary Continuing Education40 hours/2 years

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FRM Registrations

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

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%

Pass Rate

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Acceptance of the FRM Program

• 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 Top 20 companies with the most FRM Holders

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Global Participation in the FRM Program

Significant growth throughout the world since 2007

South K

orea

Hong K

ong

Switzer

land

Singapore

USASpain

CanadaIn

dia

South A

frica

The Neth

erla

ndsUK

China

0%

50%

100%

150%

200%

250%

300%

350%FRM Registration Growth Since 2007

20102011 (Projected)

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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

• Outlines topics and readings for Part 1 and Part 2 Exams

• Developed annually by FRM Committee

• Insight from Certified FRMs and risk community

Download 2011 FRM

Study Guide

• Register on GARP website: www.garp.org/frm

• Leverage candidate resources, including practice exams, books, course packs, FRM training providers (more later)

RegisterAnd

Prepare

• 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 1 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

Sit for Part 2 Exam

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FRM Registration Timeline and Fees

Program Enrollment and Exam Registration Fee

Part I Part IIProgram 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

• 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 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

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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

• 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

University Chapter Network

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Q & A

Creating a culture of risk awarenessTM

Global Association ofRisk Professionals

111 Town Square PlaceSuite 1215Jersey City, New Jersey 07310USA+ 1 201.719.7210

Minster House, 1st Floor42 Mincing LaneLondon EC3R 7AEUK+ 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 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.