CFA Level III 2025: Choose Your Path w ...
The CFA Level III curriculum for 2025 marks a significant evolution with the... Read More
The 2024 FRM syllabus has largely remained unchanged, but there are a few notable changes candidates should be aware of. Let’s dive into the details together!
Under FRM Part I, there are no significant changes in Book 1: Foundations of Risk Management, but there’s a change in wording in Reading 9: Learning from Financial Disasters.
Book 2: Quantitative Analysis has seen modifications and additions of several learning objectives in the last two Readings: Machine-learning Methods and Machine Learning and Prediction.
In Book 3: Financial Markets and Products, one learning objective has been deleted in Reading 12: Options Markets and another one in Reading 20: Swaps.
In Valuation and Risk Models, seven Readings have been updated and now include several new learning objectives. At the same time, some learning objectives have been merged, and several others deleted.
After relative quiet in recent years, GARP seems to have embarked on quite a significant update of the FRM Part II curriculum. However, the bulk of these changes have come in Book 2: Credit Risk Measurement and Management, as we shall see below.
In Book 1: Market Risk Measurement and Management, one learning objective has been introduced under Reading 7: Correlation Basics: Definitions, Applications, and Terminology, with all other Readings remaining unchanged.
As previously mentioned, Book 2: Credit Risk Measurement and Management has undergone extensive updates, with seven Readings having been deleted and replaced with new ones. At the same time, some Readings now have additional learning objectives. Besides, several readings have been merged. Out of 24 Readings, only about half are without major changes.
In Book 3: Operational Risk and Resilience, a bunch of concepts have been added to one of the learning objectives under Reading 4: Risk Measurement and Assessment. There’s also a new learning objective in Reading 5: Risk Mitigation.
There are no changes in Book 4: Liquidity and Treasury Risk Measurement and Management.
In Book 5: Risk Management and Investment Management, only one LO has been deleted in Reading 9: Hedge Funds. All the other Readings remain unchanged.
Finally, we have the last Book – Current Issues in Financial Markets. According to GARP, this section of the curriculum focuses on emerging issues in financial markets, which means we’re almost sure of getting something new every year. And true to their word, they have retained only three readings from the 2023 curriculum. These are Reading 6: Climate-related Risk Drivers and their Transmission Channels, Reading 7: Climate-related Financial Risks – Measurement Methodologies, and Reading 8: Principles for the Effective Management and Supervision of Climate-related Financial Risks.
Book 1 – Foundations of Risk Management (20%) | Comments | |
1 | The Building Blocks of Risk Management | No change |
2 | How Do Firms Manage Financial Risk? | No change |
3 | The Governance of Risk Management | No change |
4 | Credit Risk Transfer Mechanisms | No change |
5 | Modern Portfolio Theory and the Capital Asset Pricing Model | No change |
6 | The Arbitrage Pricing Theory and Multifactor Models of Risk and Return | No change |
7 | Principles for Effective Data Aggregation and Risk Reporting | No change |
8 | Enterprise Risk Management and Future Trends | No change |
9 | Learning from Financial Disasters | Wording change |
10 | Anatomy of the Great Financial Crisis of 2007-2009 | No change |
11 | GARP Code of Conduct | No change |
Book 2 – Quantitative Analysis | Comments | |
1 | Fundamentals of Probability | No change |
2 | Random Variables | No change |
3 | Common Univariate Random Variables | No change |
4 | Multivariate Random Variables | No change |
5 | Sample Moments | No change |
6 | Hypothesis Testing | No change |
7 | Linear Regression | No change |
8 | Regression With Multiple Explanatory Variables | No change |
9 | Regression Diagnostics | No change |
10 | Stationary Time Series | No change |
11 | Non-Stationary Time Series | No change |
12 | Measuring Returns, Volatility, and Correlation | No change |
13 | Simulation and Bootstrapping | No change |
14 | Machine-Learning Methods | 1 LO modified, 1 LO added |
15 | Machine Learning and Prediction | 1 LO split into 2, 1 LO modified. |
Book 3 – Financial Markets and Products | Comments | |
1 | Banks | No change |
2 | Insurance Companies and Pension Plans | No change |
3 | Fund Management | No change |
4 | Introduction to Derivatives | No change |
5 | Exchanges and OTC Markets | No change |
6 | Central Clearing | No change |
7 | Futures Markets | No change |
8 | Using Futures for Hedging | No change |
9 | Foreign Exchange Markets | No change |
10 | Pricing Financial Forwards and Futures | No change |
11 | Commodity Forwards and Futures | No change |
12 | Options Markets | 1 LO deleted |
13 | Properties of Options | No change |
14 | Trading Strategies | No change |
15 | Exotic Options | No change |
16 | Properties of Interest Rates | No change |
17 | Corporate Bonds | No change |
18 | Mortgages and Mortgage-Backed Securities | No change |
19 | Interest Rate Futures | No change |
20 | Swaps | 1 LO deleted |
Book 4 – Valuation and Risk Models | Comments | |
1 | Measures of Financial Risk | No change |
2 | Calculating and Applying VaR | 2 LOs modified |
3 | Measuring and Monitoring Volatility | No change |
4 | External and Internal Credit Ratings | No change |
5 | Country Risk: Determinants, Measures, and Implications | No change |
6 | Measuring Credit Risk | No change |
7 | Operational Risk | No change |
8 | Stress Testing | 1 new LO added |
9 | Pricing Conventions, Discounting, and Arbitrage | No change |
10 | Interest Rates | 1 LO deleted |
11 | Bond Yields and Return Calculations | 1 LO updated |
12 | Applying Duration, Convexity, and DV01 | 2 LOs updated |
13 | Modeling Non-Parallel Term Structure Shifts and Hedging | 2 LOs merged, 3 LOs updated |
14 | Binomial Trees | No change |
15 | The Black-Scholes-Merton Model | No change |
16 | Option Sensitivity Measures: The “Greeks” | 2 LOs merged and updated |
FRM Part II
Book 1: Market Risk Measurement and Management (20%) | Comments | |
1 | Estimating Market Risk Measures: An Introduction and Overview | No change |
2 | Non-Parametric Approaches | No change |
3 | Parametric Approaches (II): Extreme Value | No change |
4 | Backtesting VaR | No change |
5 | VaR Mapping | No change |
6 | Messages from the academic literature on risk measurement for the trading book | No change |
7 | Correlation Basics: Definitions, Applications, and Terminology | 1 new LO added |
8 | Empirical Properties of Correlation: How Do Correlations Behave in the Real World? | No change |
9 | Financial Correlation Modeling — Bottom-Up Approaches | No change |
10 | Empirical Approaches to Risk Metrics and Hedging | No change |
11 | The Science of Term Structure Models | No change |
12 | The Evolution of Short Rates and the Shape of the Term Structure | No change |
13 | The Art of Term Structure Models: Drift | No change |
14 | The Art of Term Structure Models: Volatility and Distribution | No change |
15 | Volatility Smiles | No change |
16 | Fundamental Review of the Trading Book | No change |
Book 2 – Credit Risk Measurement and Management (20%) | Comments | |
1 | Fundamentals of Credit Risk | New Reading |
2 | Governance | New Reading |
3 | Credit Risk Management | New Reading |
4 | Capital Structure in Banks | Former CR 3 |
5 | Introduction to Credit Risk Modeling and Assessment | New Reading |
6 | Credit Scoring and Rating | New Reading |
7 | Credit Scoring and Retail Credit Risk Management | Former CR 15 |
8 | Country Risk: Determinants, Measures, and Implications | New Reading |
9 | Estimating Default Probabilities | Former CR 4 and CR 5 merged and updated |
10 | Credit Value at Risk | New Reading |
11 | Portfolio Credit Risk | Former CR 7 with some LOs updated |
12 | Credit Risk | New Reading |
13 | Credit Derivatives | New Reading |
14 | Derivatives | New Reading |
15 | Counterparty Risk and Beyond | Former CR 9 |
16 | Netting, Close-out, and Related Aspects | Former CR 10 |
17 | Margin (Collateral) and Settlement | Former CR 11 |
18 | Central Clearing | New Reading |
19 | Future Value and Exposure | Former CR 12 |
20 | CVA | Former CR 13 |
21 | The Evolution of Stress Testing Counterparty Exposures | Former CR 14 |
22 | Structured Credit Risk | Former CR 8, with 1 new LO |
23 | An Introduction to Securitization | Former CR 17 |
Book 3 – Operational Risk and Resilience (20%) | Comments | |
1 | Introduction to Operational Risk and Resilience | No change |
2 | Risk Governance | No change |
3 | Risk Identification | No change |
4 | Risk Measurement and Assessment | 1 LO updated |
5 | Risk Mitigation | 1 LO added, 1 LO updated |
6 | Risk Reporting | No change |
7 | Integrated Risk Management | No change |
8 | Cyber-resilience: Range of Practices | No change |
9 | Case Study: Cyberthreats and Information Security Risks | No change |
10 | Sound Management of Risks Related to Money Laundering and Financing of Terrorism | No change |
11 | Case Study: Financial Crime and Fraud | No change |
12 | Guidance on Managing Outsourcing Risk | No change |
13 | Case Study: Third-Party Risk Management | No change |
14 | Case Study: Investor Protection and Compliance Risks in Investment Activities | No change |
15 | Supervisory Guidance on Model Risk Management | No change |
16 | Case Study: Model Risk and Model Validation | No change |
17 | Stress Testing Banks | No change |
18 | Risk Capital Attribution and Risk-Adjusted Performance Measurement | No change |
19 | Range of practices and issues in economic capital frameworks | No change |
20 | Capital Planning at Large Bank Holding Companies: Supervisory Expectations and Range of Current Practice | No change |
21 | Capital Regulation Before the Global Financial Crisis | No change |
22 | Solvency, Liquidity and Other Regulation After the Global Financial Crisis | No change |
23 | High-level summary of Basel III reforms | No change |
24 | Basel III: Finalizing post-crisis reforms | No change |
Book 4 – Liquidity and Treasury Risk Measurement and Management (15%) | Comments | |
1 | Liquidity Risk | No change |
2 | Liquidity and Leverage | No change |
3 | Early Warning Indicators | No change |
4 | The Investment Function in Financial-Services Management | No change |
5 | Liquidity and Reserves Management: Strategies and Policies | No change |
6 | Intraday Liquidity Risk Management | No change |
7 | Monitoring Liquidity | No change |
8 | The Failure Mechanics of Dealer Banks | No change |
9 | Liquidity Stress Testing | No change |
10 | Liquidity Risk Reporting and Stress Testing | No change |
11 | Contingency Funding Planning | No change |
12 | Managing and Pricing Deposit Services | No change |
13 | Managing Non-Deposit Liabilities | No change |
14 | Repurchase Agreements and Financing | No change |
15 | Liquidity Transfer Pricing: A Guide to Better Practice | No change |
16 | The US Dollar Shortage in Global Banking and the International Policy Response | No change |
17 | Covered Interest Parity Lost: Understanding the Cross-Currency Basis | No change |
18 | Risk Management for Changing Interest Rates: Asset-Liability Management and Duration Techniques | No change |
19 | Illiquid Assets |
Book 5 – Risk Management and Investment Management (15%) | Comments | |
1 | Factor Theory | No change |
2 | Factors | No change |
3 | Alpha (and the Low-Risk Anomaly) | No change |
4 | Portfolio Construction | No change |
5 | Portfolio Risk: Analytical Methods | No change |
6 | VaR and Risk Budgeting in Investment Management | No change |
7 | Risk Monitoring and Performance Measurement | No change |
8 | Portfolio Performance Evaluation | No change |
9 | Hedge Funds | 1 LO deleted |
10 | Performing Due Diligence on Specific Managers and Funds | No change |
11 | Predicting Fraud by Investment Managers | No change |
Current Issues in Financial Markets | Comments | |
1 | Review of the Federal Reserve’s Supervision and Regulation of Silicon Valley Bank | New Reading |
2 | The Credit Suisse CoCo Wipeout: Facts, Misperceptions, and Lessons for Financial Regulation. | New Reading |
3 | Artificial Intelligence and Bank Supervision | New Reading |
4 | Financial Risk Management and Explainable, Trustworthy, Responsible AI | New Reading |
5 | Artificial Intelligence Risk Management Framework | New Reading |
6 | Climate-related risk drivers and their transmission channels | Former CI 3 |
7 | Climate-related financial risks – measurement methodologies | Former CI 4 |
8 | Principles for the effective management and supervision of climate-related financial risks | Former CI 5 |
9 | The Crypto Ecosystem: Key Elements and Risks | New Reading |
10 | Digital Resilience and Financial Stability. The Quest for Policy Tools in The Financial Sector | New Reading |
The CFA Level III curriculum for 2025 marks a significant evolution with the... Read More
Many aspiring risk management professionals aim to pass the Financial Risk Manager (FRM®)... Read More