FRM Syllabus (Level 1 & 2) Financial Risk Management Topic Wise Syllabus

FRM Syllabus

Download FRM Syllabus from here. Candidates may download latest topics added in Part 1& Part 2 Syllabus. Financial Risk Management covers the fundamental tools and techniques used in risk management. In FRM Level 1 Exam, questions are asked from topics like Foundations of Risk Management, Quantitative Analysis, Financial Markets and Products and Valuation and Risk Models.  You may get financial risk management topic wise syllabus in PDF form. FRM Syllabus for Level 1 & & Level 2 is available on this page.

FRM Level 1 Syllabus

FRM Part 1 Syllabus:

Foundations of Risk Management (20%):

  • An understanding of corporate risk governance and the trade-off between risk and return
  • The construction of efficient portfolios
  • Fundamental asset pricing models
  • Enterprise risk management frameworks
  • Data quality management
  • A review of major financial disasters
  • To emphasize the importance of ethics as a fundamental requirement for sound risk management
  • applications of the GARP Code of Conduct to professional situations are covered in this section as well

Quantitative Analysis (20%):

In this section, aspirant’s knowledge of basic probability and statistics, regression and time series analysis is checked.

  • Monte Carlo methods
  • Volatility forecasting models
  • Value-at-Risk estimation

Financial Markets and Products (30%):

Here questions are asked from financial products and the markets topics.

  • Futures and forwards
  • Equity options, swaps, and other derivatives
  • Commodities
  • Currencies
  • Corporate bonds and interest rates
  • A basic understanding of arbitrage arguments and hedging related to these financial products.

Valuation and Risk Models (30%):

  • Basic bond valuation and bond hedging
  • Valuation using binomial trees
  • An understanding of the Black-Scholes-Merton model
  • Value-at-Risk (VaR)
  • Expected and unexpected loss estimation
  • Stress testing.

FRM Part 2 Syllabus :

Market Risk Management (25%):

  • Fixed-income interest rate sensitivities
  • Volatility exposures
  • Value-at-Risk (VaR) and back testing VaR
  • Expected shortfall (ES)
  • Correlations and copulas
  • Parametric and non-parametric estimation methods
  • Extreme value theory (EVT)
  • Exotic options and mortgage-backed securities

Credit Risk Management (25%):

In this section, aspirant’s understanding of credit risk management is checked. Lay emphasize on topics like finance and credit products to score well.

  • Counter party risk
  • Default risk and methodologies

Operational and Integrated Risk Management (25%):

  • Coverage of the tools and techniques necessary to measure, manage, and mitigate operational risk
  • Economic capital allocation
  • Enterprise risk management (ERM)
  • Knowledge of critical issues related to liquidity risk management, model risk, loss data modelling and IT infrastructure, stress testing, and risk appetite

Risk Management and Investment Risk Management (15%):

  • Risk management techniques applied to investment management process
  • Portfolio construction and performance analysis
  • Risk budgeting and portfolio and component VaR
  • Issues related to hedge funds and private equity investments

Current Issues in Financial Markets (10%):

  • Sovereign Risk and Financial Crisis
  • Flash Crash
  • Financial Innovation and Its Issues

FRM Exam Part I Books:

The four volume set includes:

  • Foundations of Risk Management
  • Quantitative Analysis
  • Financial Markets and Products
  • Valuation and Risk Management

FRM Exam Part II Books:

The four volume set includes:

  • Market Risk Measurement and Management
  • Credit Risk Measurement and Management
  • Operational and Integrated Risk Management
  • Risk Management and Investment Management

Financial Risk Manager Paper is organized for measuring the skills and knowledge of candidates regarding how to manage risk. You may have understanding of risk management concepts and approaches. FRM Syllabus for Level 1 & 2 will guide in better preparation. Make a proper time table & allot time to all topics as well as sub topics added in syllabus. Besides this, you may also practice previous year papers to score good marks.

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