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The 2024 FRM Exam Curriculum: A Closer Look at What’s New

16 Jan 2024

Summary

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!

FRM Part I

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.

FRM Part II

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.

2023/2024 Syllabus Changes in Detail

FRM Part I

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