GARP's FRM Exam Tips

FRM - both levels on same day

2010-03-02T23:22:00.000-08:00

As we all know, FRM has now been converted into a two level exam being conducted in Level 1 and Level 2. The level 1 consists of the basic fundamentals of Risk Assessment and Level 2 consists of Advanced Risk Management.

Many of the appearing candidates are interested in clearing the FRM levels and be able to use the FRM title as soon as possible for the obvious advantages it provides. Well to those candidates who have the courage and mettle to write both the FRM levels on the same day and the stamina to concentrate for long. I have a good news. Now you can write both FRM Level 1 and Level 2 on the same day(i.e. either of the two days in the year when GARP conducts FRM). So you can now write FRM Level 1 in the morning slot and then write FRM Level 2 on the same day in the afternoon slot. With this arrive the obvious worries about what happens if I clear one part and do not clear the other one.

Though nothing specifically mentioned, my best guess is that, if you are not able to clear a particular level of the exam, you can apply for a re-examination of that level. For instance, If you fail in FRM Level 2 and clear FRM Level 1, you will reapply for just the Level 2. And if you fail FRM Level 1 but clear FRM Level 2, you will have to just reapply for FRM Level 1 and not Level 2.

To me, this is a fast forward track for smart individuals who want to use their FRM titles as soon as possible. But be careful about the exam because it will be a bit hectic and tough to concentrate for long hours on tough problem.

Cheers,
Gaurav Parashar
http://www.gauravparashar.com/

FRM v/s PRM

2010-02-10T19:27:00.000-08:00

In order to support you choosing one of the certification programs we have compared certification programs by GARP and PRMIA:

Certification	FRM	PRM
Philosophy	"The FRM exam should, as much as possible, reflect real-world practices and test a manager not only on his or her technical prowess but also their ability to recognize issues. As a risk manager it would be very rare for a colleague to approach you with a problem and simultaneously identify it as a “market risk or credit risk” issue. The FRM Committee does not feel that modularizing a comprehensive risk management-related examination, allowing candidates to take and pass each section separately, is a good approach to measuring a candidates ability to make decisions in a real world environment. That methodology simply makes the exam easier to pass and does not truly measure a candidate’s overall risk management capabilities, thereby reducing its credibility and acceptance as a rigorous and globally adopted test of financial risk management competency." Certificates will be handed over only to candidates who have passed the FRM Exam and provided GARP with proof of their 2 years of work experience.	"The PRMIA Certified Risk Manager program sets the standard for assessing the knowledge, competence and integrity of risk professionals. It is the only Globally Endorsed certification program for risk managers. The exam tests a candidate's knowledge and ability to apply the essentials of financial risk management to everyday, real-life situations in the workplace." "To meet with the needs of busy professionals, the program provides for great flexibility, offering one six-hour exam for those wishing to complete evaluation in one day, or four separate exams, varying in length from one to two hours, which can be taken in any order over a period of up to two years. Passing all four exams leads to the award of the PRM designation." An online scientific calculator will be provided at the test center. No other calculators will be allowed.
Exam Structure	In two levels: I Quantitative Analysis - 10 % II Market Risk Measurement and Management - 25 % III Credit Risk Measurement and Management - 30 % IV Operational and Integrated Risk Management, Legal, Accounting, and Ethics - 25 % V Risk Management in Investment Management – 10 %	Exam I: Finance Theory, Financial Instruments and Markets (25 %, 36 questions, 120 minutes) Exam II: Mathematical Foundations of Risk Measurement (20 %, 24 questions, 120 minutes) Exam III: Risk Management Practices (30 %, 36 questions, 90 minutes) Exam IV: Case Studies, PRMIA Standards of Best Practice, Conduct and Ethics, Bylaws (25 %, 24 questions, 60 minutes)
Basic Readings	Study Guide free downloadable readings Jorion: Financial Risk Manager's Handbook, 3rd edition 2005 Readings CD	Self Study Guide Exam guide Professional Risk Managers' Handbook
Next Possible Exam Dates	May 22, 2010	any business day of the year
Testing Locations	100 cities worldwide	any of nearly 4,000 locations, operated by Pearson VUE, in over 140 countries
Format	multiple choice; around 140 questions (not presented by category) 2 – 2.5 hours sessions	multiple choice; full exam: 120 questions; Exam questions are randomly drawn, according to the syllabus order and weightings, from the exam database
Recognition of Other Designations		candidates need only to pass the following exams
		CFA, CIIA, CQF, Act. Fellow cross-over	exams III and IV
		Acturial Associates	exams I, III and IV
		CSI Financial Risk Management Graduates	exams II, III, and IV
		FRM cross-over	exams II and IV
Exam Results	Announced in around 3-4 months	15 business days after the exam has been taken
Passing Rates	44 %	49 % (exam I) -72% (exam IV)

FRM Exam 2009

2009-05-10T03:34:00.000-07:00

As you all must be knowing that FRM, conducted by GARP, in years ahead will be a two tier-ed exam in two levels LEVEL 1 and LEVEL 2. This is an indication of the growing popularity, importance, relevance and need of more financial risk manager. The following is the announcement on the Official FRM 2009 exam page:

-----------------------------------------------------

FRM© Program Expanded
The financial crisis is radically altering the global financial system. As such, the role of the financial risk professional will be more prominent as the industry retools itself for the future. So, now more than ever, risk professionals must be prepared to rise to these new challenges by enhancing their skill set. These increased demands required us to expand the FRM program. Starting this November the FRM program will begin transitioning to a two level examination format.

-----------------------------------------------------

This post is to give you a bird's eye view of FRM 2009: the benifits, changed format and improved relevance of the FRM exam. Below are the links you should definitely go through to know more about FRM 2009 (all the rights of the information in the links belong to their respective owners)

I would suggest you all to go through the above links. You should obviously search for more information over the internet, but this post will clear a lot of doubts over the format and changes in FRM 2009 over FRM 2008.

We will be following up with what's new in FRM 2009 and why the new format should drive you to become an FRM all the more, in the post crisis world.

Thanks,

Gaurav Parashar

http://www.cse.iitb.ac.in/~gauravp/

FRM Vs CFA for Quant Job/ Risk management

2009-03-08T13:08:00.000-07:00

Hi All
I first of all request all of you to please post your questions on blog and avoid sending e-mails. Although, We will try and answer those e-mails as well..

Question: I am a dual degree for IITM (CSE). I am working in IT sector since 2007 Dec. I started reading about finance and got interested in it so I decided to go for FRM as I found the content more of my interest. I wrote FRM 2008 but did not get through it.I can not go for MS or MBA right now. I am planning to do either of them after 4-5 years but I would like to enter into finance(risk management, quant) desperately :)So now I am very confused as what to choose FRM or CFA (as it is more recognized) or both for this year? :) Personally I am more inclined towards FRM but would like to know your views. Also is it really safe to switch in finance domain in current scenario??
The simple and straight answer in my opinion is FRM. As you mentioned, you have been working in IT domain for last 1- 1.5 years, moving on to a quant role would be a smooth transition ( ofcourse with little more skill set). FRM is specifically designed to pursue risk management / quant roles. By work nature, risk manageemnt jobs are heavily quantitative and would suit a background like yours. As I mentioned in one of my earlier posts, for entry level jobs it doesn't really make any difference if you are FRM / CFA.
Good points about FRM ( relevant to your specific case) :
1) Has only 1 level ( Would change to 2 levels from next year)
2) Clearly shows your focused interest towards risk management.
3) Roles like Credit risk and Market risk require experience of working on advanced excel, access, perl and other statistical softwares.
4) Adds a uniqueness to your profile
@ CFA-- You can actually find hundreds of people with CFA level 1 and level 2. You woudn't do yourself much good by adding to this crowd. I mean CFA is a fantastic option if you want to enter investment management, valuation , equity research roles and importantly, clear all the three levels. So CFA requires a dedicated effort of 2-3 years to achieve fruitful gains.
If you carry the passion for finance and are not currently sure about which role you want to enter then appearing for both FRM and CFA is a good idea and you should do it. You will have to plan your schedule and finances.
Regarding exam strategies, we will be posting very soon...

Cheers
BG

CFA along with FRM

2009-02-22T12:44:00.000-08:00

Hi All

Following up with your questions on FRM and related stuff-- I came across this general query about appearing for CFA along with FRM and all --

The fact of the matter is that in initial stages of your career in Finance, you hover around trying to find the exact place you would want to build your career in Finance. I mean, there are literally hundreds on different fields and professions within Finance and one normally spens a lot of time to figure out the field of his liking. Now FRM and CFA have different purposes and objectives. One appears for FRM to enter risk management, quantitative jobs, credit risk, market risk related jobs. CFA( so to speak) is oriented more towards Asset management, equity research and investment management jobs. One thing about CFA is that it matters only when yoy complete atleast 2 levels. Ideally you should go through all the three levels to get a materialistic gain. On the other hand, FRM ha sjust one level and hence is a little more challenging , if you compare it woth CFA levels individually. In starting stages of one's career, I feel that it doesn't really matter whether you are FRM or CFA ( when you are applying for entry level jobs).

Front end jobs in Finance would value your experience more than anything. I mean, relevant experience carries more weightage than anything else. Say for example, a person with 3 years of equity research experience is significantly better than any FRM or CFA guy, ofcourse provided that the company has a descent reputation. If anyone wants to enter capital markets and say wanna become a trader, than relevant experience is a huge plus than any degree whatsoever.

To sumamrize, I believe that in starting stages of your career, one can take either route to get that first break. After that , one automatically figures out his/ her own way. One more point is that all these certifications exams get refunded once you enter a relevant job, so if one has any plans of post graduation from abroad, then ideally it would make much more sense to appear for these cartifications once to get a fin job. But ofcourse, there is no one single way. People in investment banking enter from all sorts of backgrounds and cultures. One thing that I am preety sure about is "Networking". The bigger network of friends and seniors you have in these companies , the better it is. Around 60-80 % of the jobs are filled with referrals. So one should always strive to have a network of alumnis and friends to be aware of job openings...

Keep asking your doubts and quesries and I am sure now I will reply back to them as quickly as I can..

Cheers

Which companies would recruit you if you are FRM?

2009-02-07T05:35:00.000-08:00

Hi All

I apologise for not being able to reply to your comments as I was stuck up at my new job. This post is in reply to questions asked by Vijit from IIT Roorkee. I have decided to answer it by writing a new post and I will answer them in parts.

'Will companies recruit me if I clear FRM, even though I am from a non-finance background and have not done MBA'.

The simple and plain answer to this is "YES". I am a 2007 batch graduate in Mechanical Engg from IIT Roorkee. I first joined GE, combustion team, which involved designing and work heavily oriented towards mechanical engg. I passed FRM in 2007 and got next job in HSBC as Analyst in Consumer & Mortgage Lending. Now I have joined Deutsche Bank as Analyst in Mumbai. As I mentioned earlier, I am not a MBA and there are many people like me who are working in all these banks..

Let me first clear out the myth about working for a "Finance" firm. In most of the banks, when an engineer is hired , most of the times he gets involved in "Glorified Coding". I mean you analyse big datasets and churn out the final numbers and then try to make a business sense to it. By no means I intend to say that its a useless job but the fact is that, in most of these places no one expects you to know anything about finance at all, as far as analyst level is concerned . If you know, it helps , but even if you don't - IT's FINE... I can tell you from my experience that the real learning, especially in Finance, occurs only when you work in a related office. These degrees like MFE, MBA, FRM , CFA , is about adding credentials on your resume, networking and making a strong point that " YOU ARE PASSIONATE ABOUT IT".

After FRM, you stand a strong chance of working in a risk analytics division of a bank. So companies like, Deutsche Bank, JP Morgan, Morgan Stanley, HSBC should be your targets. Like in DB, we have a strong risk management team , and we work extensively with options, swaps, CDS, CDO's and other derivatives...

I would be writing other posts very soon and will answer any more follow up questions you may have from your side.

BG

Introduction

2009-01-26T00:40:00.000-08:00

Hi Friends!

Since, you people are seeing this blog, we can safely assume that you are interested in finance and more so in financial risk management.

What is this blog about?

This blog is dedicated to Financial Risk Management ( FRM) exam conducted by Global Association of Risk Professionals ( GARP). This blog will be managed by people who have recently cleared FRM and other related exams and thus can provide you valuable inputs on cracking the exam. In this blog:

0) We will give you the tips and tricks and the exam strategies for FRM exam. We wouldn't actually be teaching you but would touch upon winning strategies along with providing a broad perspective on latest risk management issues.

1) We will focus on preparation strategies that will enable you to focus on important topics and their sub-topics.

2) We will share insights on FRM's growing prestige and how this may help you out in your career.

3) We also aim to invite 'Guests' on this blog , who will share their job experiences and discuss the career options after this exam.

4) We may be inviting various FRM coaching institutes to discuss their study modules, fees, batch starting dates and location.

5) We may post internship and job opportunities in risk related field (depending on the blog's following and popularity).

About the Authors:

Brijesh Goel: He is working as an analyst in risk management group of Deutsche Bank. He cleared FRM in 2008 and he is also a CFA level 2 candidate. Brijesh is a passout from Indian Institute of Technology, Roorkee and a graduate in Mechanical Engineering. Prior to the current role, he was working with HSBC, Consumer & Mortagage Lending division. Brijesh has published various articles and research papers during his graduation and is currently working on various new initiatives.

Gaurav Parashar: Gaurav is an undergraduate student at the Indian Institute of Technology Bombay. He cleared Financial Risk Management Exam in 2009. Being 19 and clearing FRM he boasts of very strong quantitative analysis and fundamental finance. He has published several times for magazines and journals of the much coveted IIM's. He will share with you the informal ways to prepare & how to ease your effort by planning and smartness. You can find more about him here.