FINANCIAL RISK MANAGER

2019

FRM ®

Study Guide Changes

 2019 Financial Risk Manager (FRM®) Study Guide Changes

FRM EXAM
PART I

© 2018 Global Association of Risk Professionals garp.org/frm 2

 2019 Financial Risk Manager (FRM®) Study Guide Changes

Foundations of Risk Management

FRM EXAM PART I

PART I EXAM WEIGHT | 20%

ADDITIONS

• None

DELETIONS

• None

UPDATES

1. Previous version: Zvi Bodie, Alex Kane, and Alan J. Marcus, Investments, 10th Edition (New York, NY:
McGraw-Hill, 2014).
• Chapter 10. Arbitrage Pricing Theory and Multifactor Models of Risk and Return

Updated version: Zvi Bodie, Alex Kane, and Alan J. Marcus, Investments, 11th Edition (New York, NY:
McGraw-Hill, 2017).
• Chapter 10. Arbitrage Pricing Theory and Multifactor Models of Risk and Return

© 2018 Global Association of Risk Professionals garp.org/frm 1

 2019 Financial Risk Manager (FRM®) Study Guide Changes

Quantitative Analysis
FRM EXAM PART I

PART I EXAM WEIGHT | 20%

ADDITIONS

• None

DELETIONS

• None

UPDATES

1. Previous version: John C. Hull, Risk Management and Financial Institutions, 4th Edition (Hoboken, NJ:
John Wiley & Sons, 2015).
• Chapter 10. Volatility
• Chapter 11. Correlations and Copulas

Updated version: John C. Hull, Risk Management and Financial Institutions, 5th Edition (Hoboken, NJ:
John Wiley & Sons, 2018).
• Chapter 10. Volatility
• Chapter 11. Correlations and Copulas

© 2018 Global Association of Risk Professionals garp.org/frm 2

 2019 Financial Risk Manager (FRM®) Study Guide Changes

Financial Markets and Products

FRM EXAM PART I

PART I EXAM WEIGHT | 30%

ADDITIONS

• None

DELETIONS

• None

UPDATES

1. Previous version: John C. Hull, Risk Management and Financial Institutions, 4th Edition (Hoboken, NJ:
John Wiley & Sons, 2015).
• Chapter 2. Banks
• Chapter 3. Insurance Companies and Pension Plans
• Chapter 4. Mutual Funds and Hedge Funds

Updated version: John C. Hull, Risk Management and Financial Institutions, 5th Edition (Hoboken, NJ:
John Wiley & Sons, 2018).
• Chapter 2. Banks
• Chapter 3. Insurance Companies and Pension Plans
• Chapter 4. Mutual Funds, ETFs, and Hedge Funds

2. Previous version: Anthony Saunders and Marcia Millon Cornett, Financial Institutions Management: A Risk
Management Approach, 8th Edition (New York, NY: McGraw-Hill, 2014).
• Chapter 13. Foreign Exchange Risk

Updated version: Anthony Saunders and Marcia Millon Cornett, Financial Institutions Management: A Risk
Management Approach, 9th Edition (New York, NY: McGraw-Hill, 2017).
• Chapter 13. Foreign Exchange Risk

© 2018 Global Association of Risk Professionals garp.org/frm 3

 2019 Financial Risk Manager (FRM®) Study Guide Changes

Valuation and Risk Models

FRM EXAM PART I

PART I EXAM WEIGHT | 30%

ADDITIONS

• None

DELETIONS

• None

UPDATES

1. Previous version: Aswath Damodaran, “Country Risk: Determinants, Measures and Implications - The 2017
Edition” (July 19, 2017). (pages 1-47 only).

Updated version: Aswath Damodaran, “Country Risk: Determinants, Measures and Implications - The 2018
Edition” (July 23, 2018). (pages 1-49 only).

2. Previous version: John C. Hull, Risk Management and Financial Institutions, 4th Edition (Hoboken, NJ:
John Wiley & Sons, 2015).
• Chapter 23. Operational Risk

Updated version: John C. Hull, Risk Management and Financial Institutions, 5th Edition (Hoboken, NJ:
John Wiley & Sons, 2018).
• Chapter 23. Operational Risk

© 2018 Global Association of Risk Professionals garp.org/frm 4

 2019 Financial Risk Manager (FRM®) Study Guide Changes

FRM EXAM
PART II

© 2018 Global Association of Risk Professionals garp.org/frm 5

 2019 Financial Risk Manager (FRM®) Study Guide Changes

Market Risk Measurement and Management

FRM EXAM PART II

PART II EXAM WEIGHT | 25%

ADDITIONS

• None

DELETIONS

• None

UPDATES

• None

© 2018 Global Association of Risk Professionals garp.org/frm 6

 2019 Financial Risk Manager (FRM®) Study Guide Changes

Credit Risk Measurement and Management

FRM EXAM PART II

PART II EXAM WEIGHT | 25%

ADDITIONS

• None

DELETIONS

• None

UPDATES

• None

© 2018 Global Association of Risk Professionals garp.org/frm 7

 2019 Financial Risk Manager (FRM®) Study Guide Changes

Operational and Integrated Risk Management

FRM EXAM PART II

PART II EXAM WEIGHT | 25%

ADDITIONS

1. “High-level summary of Basel III reforms,” (Basel Committee on Banking Supervision Publication,
December 2017).

2. “Basel III: Finalising post-crisis reforms,” (Basel Committee on Banking Supervision Publication,
December 2017): 128-136.

3. “Basel III: Finalising post-crisis reforms,” (Basel Committee on Banking Supervision Publication,
December 2017).* {Note: The full document is included as an optional regulatory reading for reference for
candidates interested in the complete regulatory framework}.

DELETIONS

1. Standardised Measurement Approach for operational risk - consultative document,” (Basel Committee on
Banking Supervision Publication, March 2016).

UPDATES

1. Previous version: John C. Hull, Risk Management and Financial Institutions, 4th Edition (Hoboken, NJ:
John Wiley & Sons, 2015).
• Chapter 15. Basel I, Basel II, and Solvency II
• Chapter 16. Basel II.5, Basel III, and Other Post-Crisis Changes
• Chapter 17. Fundamental Review of the Trading Book

Updated version: John C. Hull, Risk Management and Financial Institutions, 5th Edition (Hoboken, NJ:
John Wiley & Sons, 2018).
• Chapter 15. Basel I, Basel II, and Solvency II
• Chapter 16. Basel II.5, Basel III, and Other Post-Crisis Changes
• Chapter 17. Regulation of the OTC Derivatives Market
• Chapter 18. Fundamental Review of the Trading Book

*This reading is freely available on the GARP website.

© 2018 Global Association of Risk Professionals garp.org/frm 8

 2019 Financial Risk Manager (FRM®) Study Guide Changes

Risk Management and Investment Management

FRM EXAM PART II

PART II EXAM WEIGHT | 15%

ADDITIONS

• None

DELETIONS

• None

UPDATES

1. Previous version: Zvi Bodie, Alex Kane, and Alan J. Marcus, Investments, 10th Edition (New York, NY:
McGraw-Hill, 2014).
• Chapter 24. Portfolio Performance Evaluation

Updated version: Zvi Bodie, Alex Kane, and Alan J. Marcus, Investments, 11th Edition (New York, NY:
McGraw-Hill, 2017).
• Chapter 24. Portfolio Performance Evaluation

© 2018 Global Association of Risk Professionals garp.org/frm 9

 2019 Financial Risk Manager (FRM®) Study Guide Changes

Current Issues in Financial Markets

FRM EXAM PART II

PART II EXAM WEIGHT | 10%

ADDITIONS

1. Emanuel Kopp, Lincoln Kaffenberger and Christopher Wilson, “Cyber Risk, Market Failures, and Financial
Stability,” (August 2017). IMF Working Paper No. 17/185.*

2. “Artificial intelligence and machine learning in financial services,” Financial Stability Board, Nov. 1, 2017.*

3. Peter Gomber, Robert J. Kauffman, Chris Parker and Bruce Weber, “On the Fintech Revolution:
Interpreting the Forces of Innovation, Disruption and Transformation in Financial Services,” Journal of
Management Information Systems (2018): 35(1), 220-265.*

4. “What is SOFR?” CME Group, March 2018.*

DELETIONS

1. Benjamin H. Cohen and Gerald A. Edwards, Jr., “The new era of expected credit loss provisioning,” BIS
Quarterly Review, March 20, 2017.*

2. Hyun Song Shin, “The bank/capital markets nexus goes global,” BIS Quarterly Review, November 2016.*

3. “FinTech credit: Market structure, business models and financial stability implications.” BIS—Committee
on Global Financial Systems, May 2017.*

4. Andrew W. Lo, “The Gordon Gekko Effect: The Role of Culture in the Financial Industry,” Federal Reserve
Bank of New York Economic Policy Review, 22(1) (August 2016).*

UPDATES

• None

*This reading is freely available on the GARP website.

© 2018 Global Association of Risk Professionals garp.org/frm 10

 2019 Financial Risk Manager (FRM®) Study Guide Changes

Creating a culture of risk awareness ®

garp.org
About GARP | The Global Association of Risk Professionals (GARP) is a non-partisan,
not-for-profit membership organization serving the risk management industry.
Founded in 1996, GARP advances the profession through education, research and
promotion of best practices through the GARP Risk Institute, GARP Benchmarking
Initiative and an array of informational and certification programs. GARP has
200,000 members in more than 190 countries and territories, and has certified more
than 50,000 professionals.

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