Which Books Are Good For FRM Part I?

Right from Part I, Financial Risk Management (FRM) exams are rigorous. Preparing for these exams is no small feat either and besides dedication, it would require the right reading materials. While some students reportedly spend 400 hours reading, the Global Association of Risk Professionals (GARP) says the minimum amount of study time before any FRM exam should be 275 hours. Crazy, right?

Well, threats aside, you want to get FRM Part I books that you easily understand, right? No one wants to spend 275 hours reading anything! I mean, you’re technically flipping the pages but walking out of the library without getting the hang of basic concepts at the end of the day! There’s another danger – reading out of scope. Well, there’s so much information all over and you may find yourself reading something that won’t help you. 

If you’ve encountered any of this before, we’re here to banish the hassle once and for all. This article features the best FRM Part I books that you can bank on for great results and a good understanding of financial risk management. Scroll down!

FRM Core Areas

Four key areas define FRM Part I:

1. Foundations of Risk Management (Book 1)
2. Quantitative Analysis (Book 2)
3. Financial Markets and Products (Book 3)
4. Valuation and Risk Models (Book 4)

To become a high-end financial risk manager, you have to pass FRM exams and establish concrete knowledge of these four areas. The exams challenge your knowledge of financial risk management and how you would apply the concepts therein in real-life circumstances of a business. As the questions may target one concept and really delve in, you want to source the best materials for each topic to understand concepts from the inside out.

After passing Part I, there’s the second level that requires similar or more effort to pass. Thereafter you’ll become a certified financial risk manager. Before we get to the gist of the matter, you want to understand the type of reading materials available and which ones to focus on.

Types of FRM Study Materials

The list below features the study materials in their order of relevance with the last being the most relevant.

• Online articles: These are the most instrumental for light reading, hence, you may not fully depend on them to understand a whole FRM concept. Besides, if you find it hard to understand a concept, online articles are the best alternative for their simplified language.
• Third-party books: These books target certain aspects of risk management and cover the whole nine yards. Books like structured finance, fixed-income securities, international portfolio diversification, financial engineering and derivatives pricing, and banking operations among others provide more information than other sources. However, there’s the danger of breaching the scope of FRM Part 1. Hence the need for a curriculum guide.
• Approved Prep Providers: This is among the most effective study material as it employs videos, articles, webinar meetings, and video tutorials. The videos include instructors and impactful visual effects to make learning comprehensive. However, you’d need to ensure that the study package providers are approved. Study packages include group discussion through webinars, practice questions, and quizzes, among other effective learning techniques.
• GARP books: Books provided by the Global Association of Risk Professionals are the most recommended worldwide. Its FRM Part I books features a comprehensive study guide, topic-wise questions, and study notes. The books are most useful for prepping for exams as GARP is the body that sets the FRM exams. The books are available on the agency’s official website as PDFs, hard copies, and eBooks. 

The Best FRM Part I Books

1. Foundations of Risk Management

Risk Management in Finance: Six Sigma and Other Next Generation Techniques (1st Edition by Anthony Tarantino and Deborah Cernauskas)

The book brings forth more emphasis on realistic operational risk management whose strategies will help a business stand amidst a turbulent economy. The author has done a successful job of highlighting modern management risk failures and providing a framework for solving them. Besides, the book features practical techniques to forestall next-generation risk management failures.

Buy on Amazon

2. Quantitative Analysis

Value at Risk: The New Benchmark for Managing Financial Risk (3rd Edition by Philippe Jorion)

Since its first edition, this book has been an international bestseller for providing practical risk management techniques for modern economics. You’ll immediately notice a significant emphasis on operational risk and VAR for investment management, integrated risk management, and measuring economic capital. With the book, you’ll cover all aspects of VAR including computing and backtesting models, forecasting risk, etc.

Buy on Amazon

3. Financial Markets and Products

Options, Futures, and Other Derivatives (8th Edition by John C Hull)

This is a perfect start for students who have a limited mathematics background. The book uncovers different concepts that help bridge the gap between theory and practice. This edition features credit crisis, modeling of commodity prices, and valuing of commodity derivatives.

Buy on Amazon

4. Valuation and Risk Models

Understanding Market, Credit, and Operational Risk: The Value at Risk Approach (1st Edition by Linda Allen, Jacob Boudoukh, and Anthony Saunders)

The book sheds light on the building blocks of VAR and how to use VAR models. It provides a real-world guide to applying these models in measuring operational risk, credit risk, and market risk. The text illustrates VAR models with practical examples, hence spelling out the logic working behind economics and statistics.

Buy on Amazon

5. GARP 2023 FRM Exam Part I Books

These books are cross-checked and updated year after year in light of changes in modern risk management. The books comprehensively cover all the core areas of risk management and are available as both hard books and eBooks.

Buy on the GARP site.

Conclusion

You don’t have to fail FRM exams anymore with the presence of valuable books. The books are also available in other online stores and in other forms. You can also download the FRM Part I books PDF either for free or at a small fee.