Financial Services Risk Management Professional Examination Scheme

Overview

The financial services risk management professional examination scheme intends to build and nurture necessary competence for Risk Management strategist in the banking, insurance and financial sector. It provides knowledge and skills in the use and application of financial risk management tools and nurture the details of financial Risk management and internal control framework. It covers the knowledge and skills on utilization of Risk Management techniques for effective decision making and provides competence and proficiency necessary for identifying and solving complex financial Risk situations.

The examination scheme intends to cover the meaning, scope and purpose of Risk Management, Risk Management framework, risk governance, risk aware culture, risk assessment, risk response and insurance, operational risk management, risk assurance and future of risk management as generic component and narrows down to risk analytics with financial risk management as a key component.

The Risk Management Professional Examination Scheme shall consist of 150 weighted multiple choice questions and two written case studies question on financial services risk management with a total score of 500 points where the pass mark is 375 points. The Examination will usually take three hours.

The Financial Services Risk Management examination scheme consists of the ten modules under Certified Risk Management Professional above and focus on the following module.

Module I: Foundation in Risk Management

1. Meaning, scope and purpose of risk management
2. Risk Management framework
3. Risk Governance
4. Risk Aware Culture

Module II: Introduction to Financial Risk Management

1. Introduction to Risk and Return
2. The efficiency frontier and Capital Asset Pricing Model
3. Arbitrage Pricing Theory
4. Risk Management for financial institutions
5. Credit Rating

Module II: Risk Management is Banks

1. Commercial Banking and capital Requirements
2. Deposit insurance
3. Investment banking and security trading
4. The risks facing banks

Module III: Risk Management in Insurance Companies and Pension Plans

1. Life Insurance
2. Annuity Contracts
3. Mortality Tables
4. Longevity and Mortality Risk
5. Property Casuality Insurance
6. Health Insurance
7. Moral Hazard and Adverse selection
8. The Risk facing Insurance Companies and Pension Plans

Module IV: Trading in Financial Markets

1. The markets
2. Long and short positions in Assets
3. Derivative Markets
4. Plain Vanilla Derivatives
5. Exotic Options and Structured Products
6. Risk Management challenges in Financial Markets
7. Mutual Funds and Hedge Funds

Module V: Interest Rate Risks, Value at Risk and Volatility

1. Management of net interest income
2. LIBOR and Swap Rates
3. Duration and Convexity
4. Interest Rate Deltas in Practice
5. Definition of VaR and Calculation
6. VaR and Capital
7. Coherent Risk Measures
8. Marginal VaR, Incremental VaR and Component VaR
9. Implied volatilities
10. Power Law
11. Exponentially Weighted Moving Average and Volatility Modeling

Module VI: Basel I, Basel II, Basel 2.5, Basel III, Solvent II and Dodd-Frank

1. Bank Regulations
2. Basel II, 2.5 and III
3. Credit Risk and Operational Risk
4. Solvency II
5. Dodd-Frank Act
6. Banking Legislation in other countries

Module VII: Market Risk

1. Historical simulation approach
2. Extreme Value theory
3. Correlation and Covariance Matrices
4. Linear Model and option
5. Monte Carlo simulation
6. Model Building vs. Historical Simulation

Module VIII: Credit Risk and Estimating Default Probabilities

1. Credit Ratings and Historical default probabilities
2. Recovery Rates and credit default swaps
3. Credit spreads
4. Comparison of Default probabilities estimates
5. Using equity prices to estimate default probabilities
6. Credit Risk in Derivatives
7. Credit Value at risk
8. Lesson learned from credit crisis 2007-2012

Module IX: Operational Risk in Financial Services

1. Operational Risk and determination of regulatory capital
2. Loss Severity and loss frequency
3. Proactive approaches
4. Insurance
5. Sarbanes Oxley

Module X: Liquidity Risk and model risk

1. Liquidity Trading Risk, funding risk and liquidity black holes
2. Model Risk and marking to market
3. Hedging and dangers of building the model
4. Detecting model problems
5. Managing trading room and risk limits