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, Socit Gnrale, 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.

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.coms 2010 list of top 100 careers with great pay and growth prospects, expecting 10-year job growth of 24%.
Source CNN Money

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 individuals 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. Ren Stulz (Chairman) Rich Apostolik Richard Brandt Juan Carlos Garcia Cespedes Dr. Chris Donohue Herv Geny Dr. Satyajit Karnik, FRM Kai Leifert, FRM Steve Lerit William May Michelle McCarthy Michael B. Miller, FRM Ezra Uzi Moualem, FRM Dr. Victor Ng Dr. Elliot Noma Liu Ruixia Robert Scanlon Dr. Til Schuermann Serge Sverdlov Alan Weindorf
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Everett D. Reese Chair of Banking and Monetary Economics, Ohio State University President and Chief Executive Officer, GARP Risk Oversight, Citibank Head of Risk Methodologies, BBVA Managing Director, Head of GARP Research Center Global Head of Risk, ICAP Fordham University Regional CRO, Northern Trust Global Investments Senior Vice President, Bank 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 Partner, Oliver Wyman Senior Quantitative Manager, Microsoft Corporation Treasury, Visa

The FRM Program

Part I Exam
(4 hours, 100 MCQ)

Part II Exam
(4 hours, 80 MCQ)

Demonstrate two years relevant work experience

Certified Financial Risk Manager (FRM)

Voluntary Continuing Education

40 hours/2 years

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%) 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 curriculum focuses on the practical application of those tools

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
FRMRegistrations

PassRate
FullExam PartI PartII
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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% 52.5% 39.3% 54.0% 54.9%

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%

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% 2011 (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

Download 2011 FRM Study Guide

Register And Prepare

Sit for Part 1 Exam

Sit for Part 2 Exam

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)

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

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FRM Registration Timeline and Fees

Program Enrollment and Exam Registration Fee Part I
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 USD 350 USD 475 USD 650

Part II
USD 300 USD 350 USD 475 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 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

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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
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

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Q&A

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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.