FRM Part 2 – Exam Pattern, Dates, Fees, Syllabus & Eligibility [2024 Update]

Financial Risk Manager or as we know it FRM is a globally respected certification for educational excellence and pathway for those who want to build a career in risk management. In order to hold a FRM certification, one needs to clear both the parts of FRM and provide a work experience of minimum 2 years. After clearing FRM part 1, next comes the challenging FRM part 2 with its vast and complex concepts. This article will enact as a guide for you to provide all the essential information you need to conquer FRM part 2 in 2024. So without further ado, let’s dive right in!

About FRM Part 2

FRM Part 2 entails six subjects in total:

• Market risk measurement and management
• Credit risk measurement and management
• Operational and integrated risk management
• Liquidity and treasury risk measurement and management
• Risk management and investment management
• Current issues in financial markets

These subjects test your knowledge in depth regarding risk management using real world scenarios. While FRM Part 1 helps you build a foundation for financial concepts, FRM Part 2 gets a little more challenging with the concepts. It will test your application and deeper understanding of the concepts. So it is safe to say that only theoretical knowledge or rot learning won’t suffice while preparing for FRM Part 2.

FRM Part 2 Exam Structure

The questions of FRM Part 2 are designed in such a way that will test the candidate’s knowledge and understanding of the subjects. The balance of numerical and application questions are neutral and differs from time to time. Sometimes a single question requires you to apply multiple concepts at the same time. Comprising of 80 multiple-choice questions with an exam duration of four hours, following are the weightage of the of the six topic areas:

There is no negative marking for incorrect or unanswered questions when it comes to grading for FRM Part 2. Each question carries equal weightage, meaning 1 mark for each correct question (80 questions 1 mark = 80 marks).

Pass Rates

Topics Covered in FRM Part 2

The subject areas covered in FRM Part 2 are essentially vast and complex. One needs to have a strong foundation and clear understanding of fundamentals before jumping into the preparation of Part 2. Let’s take a look at what each topic covers:

Market risk measurement and management: This topic has approximately 20% weightage in the exam and is one of the most important subjects that one needs to tackle first in their preparation. Some of the tricky and application based questions too are asked from its learning objectives (LOs) like:

• Term Structure Models of Interest Rate
• VaR Mapping and Expected Shortfall
• Volatility Smiles
• Risk Metrics and Hedging
• Fundamentals of Trading Book (FRTB)

Credit risk measurement and management: This is one of the lengthiest and time taking subjects of FRM Part 2 with a weightage of 20%. Most of the concepts are straightforward and easy to understand but requires extensive practice in relation to types of questions. Some of the testable questions from this section are:

• Counterparty Risk
• Credit VaR
• Credit Derivatives
• Structured Finance
• Securitization
• Expected and Unexpected Loss

Operational and integrated risk management: This subject is very straightforward and easy to understand. Although it may become repetitive it is important to pay attention while studying this topic as one can easily score in this area. The subtopics in the subject area keeps getting updated every year but some of the important ones are: Basel requirements for operational risk, loss distribution approach and scenario analysis.

Liquidity and treasury risk measurement and management: This subject has 15% of weight in the exam. This topic is complex with some of the important subtopics like:

• Funding Liquidity Risk
• Balance Sheet Management
• Liquidity Portfolio Management
• Cross Currency Funding

Risk management and investment management: This broad topic covers a variety of risk and investment techniques like portfolio construction, risk budgeting, risk monitoring and risk adjusted performance. Candidates can expect the most amount of numericals and decision-making type of questions from this subject.

Current issue in financial markets: This particular topic varies almost every year and requires the candidate to be updated about the latest trends in the financial markets. GARP likes to keep FRM candidates up-to-date with the latest practices and issues of the industry.

FRM Part 2 Dates, Registration Process and Fees for 2024

FRM Part 2 May Exam Dates (2024)

FRM Part 2 May Exam Fees (2024)

There is no need to pay enrollment fees again.

Study and Last Minute Tips

The whole process of preparation and approaching the exam can be a tedious and exhausting process. Trust me! I have been there. So I understand what you are going through.

How to Prepare for the Exam?

1. Eat that frog: Start with the most difficult topic area according to you. Make you sure you are actually understanding the topics rather than just studying it. This will increase your level of comprehension of the subject material.
2. Keep revisiting the older topics: Due to the vastness of the FRM Part 2, most of the candidates find it difficult to remember every topic knowledge. So it is important to keep revisiting what you have already studied to make sure you don’t forget the concepts.
3. Get a Proper Guidance: It is important that you have a mentor who can guide you in your FRM preparation journey. This can help you provide a structure to your preparation as well as clear your doubts. The WallStreet School’s FRM Program is designed to help you at every stage of your preparation. From pre-recorded lectures that help you study at your own pace to doubt solving forums where you can contact your coach as well as interact with your peers, it is a well-thought program to help you excel the FRM certification. For more information click here.
4. Practice is important: I cannot stress this point enough. Practice as many VARIETY of questions as possible. Quality over quantity is key when it comes to practising for FRM Part 2. Wisely make use of your question banks like Scheweser, Analyst Prep, Bionic Turtle etc.
5. Mock Exams: This is the extremely essential element in your preparation. Make sure you give as many mock tests as possible because this will not only give you a sense of your level of preparation but also boost your confidence. This will also help you manage your time in a real exam-like setting.

How to Approach the Exam?

1. No new concepts before exam: Learning new concepts before exam can add-on to your exam anxiety. It is recommended to keep revisiting the older concepts to strengthen your foundation.
2. Review all the important formulas: Do not forget to review the formulas to avoid forgetting it during the exam.
3. Tackle Easier questions first: Doing this will help you approach the exam more confidently and with ease.
4. Rest your mind before the D-Day: Rest is extremely crucial before an exam. Get that 8 hours of sleep for more brain productivity and make sure you don’t skip any meal. Stay hydrated as it would help you calm down those nerves just before the exam.

Hope this article was helpful for your FRM Part 2 preparation.

Goodluck!