FRM Part I – Financial Risk Manager

Build Strong Foundations in Financial Risk Management, Quantitative Analysis and Financial Markets

FRM Part I – Financial Risk Manager is the first examination level of the globally recognised Financial Risk Manager (FRM®) certification programme conducted by the Global Association of Risk Professionals (GARP), USA.

The examination focuses on the fundamental concepts, analytical techniques and financial instruments used to identify, measure, evaluate and manage financial risks.

FRM Part I combines risk management principles, quantitative analysis, financial markets, derivatives, valuation techniques and risk models, developing essential analytical and technical skills for careers in banking, investment management, insurance and financial risk management.

As a GARP Approved Exam Preparation Provider, Actuators Educational Institute (AEI) offers structured preparation aligned with the FRM Part I curriculum.

Course Structure & Syllabus

FRM Part I comprises four major subject areas covering financial risk management concepts and their practical applications.

Key Topics Covered:

1. Foundations of Risk Management:
   Types of financial risks, risk management frameworks, corporate governance, risk appetite, enterprise risk management, financial disasters and ethical principles.
2. Quantitative Analysis:
   Probability distributions, statistical inference, hypothesis testing, regression analysis, time series modelling, volatility estimation and quantitative risk assessment.
3. Financial Markets & Instruments:
   Money markets, capital markets, bonds, equities, derivatives, forwards, futures, options, swaps and financial market structures.
4. Derivative Pricing & Valuation:
   No-arbitrage principles, forward and futures pricing, option valuation, Black-Scholes-Merton models and financial instrument valuation.
5. Market Risk Measurement:
   Value at Risk (VaR), Expected Shortfall, risk factor modelling, volatility, stress testing and scenario analysis.
6. Fixed-Income Valuation & Risk:
   Bond pricing, yield curves, duration, convexity, interest rate risk, credit spreads and fixed-income risk measures.
7. Risk Models & Financial Applications:
   Quantitative risk models, portfolio risk assessment, model assumptions, risk measurement techniques and practical financial risk analysis.

The FRM Part I syllabus focuses on financial risk measurement, quantitative modelling, valuation techniques and understanding financial markets, establishing the technical foundation required for advanced risk management studies.

Syllabus Topics & Weightages

The FRM Part I curriculum comprises four principal areas:

The curriculum is reviewed annually by GARP. Candidates should refer to the syllabus applicable to their examination year.

Examination Structure

FRM Part I is a computer-based multiple-choice examination assessing financial risk management concepts, quantitative techniques and practical applications.

Important Examination Guidelines

• Multiple-Choice Examination:
  Candidates must attempt 100 equally weighted questions within four hours.
• Conceptual & Numerical Applications:
  Questions evaluate financial risk concepts, quantitative calculations, financial instruments and valuation techniques.
• Calculators:
  Only calculator models approved by GARP are permitted.
• Formula Requirements:
  Candidates are expected to understand and apply relevant financial and statistical formulas. Formula sheets are not provided.
• Examination Booking:
  Candidates must register through the GARP portal and schedule their examination within the applicable testing window.
• Examination Conduct:
  Candidates must comply with GARP’s identification, calculator, examination security and testing-centre requirements.

Eligibility Criteria

FRM Part I is suitable for students, graduates and working professionals interested in financial risk management.

• No minimum educational qualification or professional experience is required to register for FRM Part I.
• Undergraduate and postgraduate students from Commerce, Finance, Economics, Mathematics, Statistics and Engineering backgrounds can appear.
• Working professionals in banking, insurance, investments, auditing and financial services may also pursue the examination.
• A basic understanding of mathematics, probability, statistics and financial concepts is recommended.
• Candidates must satisfy GARP’s applicable registration and identification requirements.

Important: To obtain the FRM certification, candidates must pass both FRM Part I and Part II and submit evidence of at least two years of relevant professional work experience, in accordance with GARP’s requirements.

Learning Objectives

Studying FRM Part I develops the ability to:

• Understand fundamental financial risk management principles.
• Identify different types of financial risks.
• Apply probability and statistical techniques to risk measurement.
• Analyse financial markets and investment instruments.
• Understand forwards, futures, options and swaps.
• Apply financial valuation and derivative pricing techniques.
• Calculate and interpret Value at Risk and other risk measures.
• Analyse fixed-income securities and interest rate risks.
• Develop quantitative and analytical risk assessment skills.

Practical Applications of FRM Part I

The knowledge gained in FRM Part I is applicable across several financial and risk management disciplines:

1. Banking & Financial Institutions:
   Identifying market, credit and liquidity risks, evaluating financial exposures and supporting risk management decisions.
2. Investment & Portfolio Management:
   Analysing financial instruments, portfolio risks, derivatives and investment strategies.
3. Insurance & Actuarial Risk Management:
   Assessing financial risks, investment exposures and asset-liability management considerations.
4. Treasury & Corporate Finance:
   Evaluating interest rate exposures, currency risks, financial instruments and hedging strategies.
5. Financial Risk Consulting:
   Applying quantitative models, analysing financial risks and supporting enterprise risk management frameworks.

FRM Part I establishes the foundational knowledge required for FRM Part II, which focuses on advanced applications of market risk, credit risk, operational risk, liquidity risk and investment risk management.

Technical Requirements – AEI Learning Application

To access online classes, recorded lectures and digital study resources, students must ensure their devices meet the following minimum technical requirements of the Actuators Educational Institute (AEI) Learning Application.