Last updated on November 17th, 2025 at 03:06 pm
Financial risk management qualification from GARP, one of the fastest growing professional qualification. In this article, I will take you through the detailed FRM Syllabus and walkthrough for optimum preparation. Planning to become a global risk management professional? Understanding the FRM syllabus is the first and most important step. The Financial Risk Manager (FRM) certification offered by GARP is one of the world’s most respected qualifications in banking, credit risk, market risk, and financial analytics. The exam is divided into Part I and Part II, each testing a different layer of skills: Part I focuses on the core foundations of risk, quantitative tools, financial markets and basic valuation models, whereas Part II applies these concepts to real-world risk management, covering market, credit, operational, investment, liquidity, and emerging risks.
In this detailed guide, I break down the official FRM syllabus, topic weightage, learning objectives, and how much time to allocate to each module along with a practical study plan to help you prepare effectively. By the end, you’ll know exactly what to study, how to structure your preparation, and which areas matter most in the exam.
FRM Syllabus Overview
Below I have shown the broader classification of subjects across 4 areas. More or less in my experience, and understanding of the syllabus the FRM level 1 is majorly foundational. As you can see from the FRM Course syllabus below, that higher weightage is towards topics like financial markets.
FRM PART 1 SYLLABUS
The FRM subjects in part 1 include;
- Foundations of risk management
- Quantitative analysis
- Financial Markets and Products
- Valuation and Risk models.
FRM PART 2 SYLLABUS
Similarly, FRM course subjects for part 2 include;
- Market risk measurement and management
- Credit risk measurement and management
- Operational and integrated risk management
- Liquidity and treasury risk management
- Risk management and investment management
- And Current issues in financial markets.
In contrast to the FRM subjects in the part 1, the more risk management relevant content is makes its way in part 2. Especially topics like Market risk measurement, credit risk measurement, risk measurement and management etc.
Detailed FRM Syllabus (2025)
Now that you know the overview of what the FRM subjects include, let me now take you through some detailed walkthrough. And also share my personal experience of such topics in the industry.
FRM level 1 Syllabus- 5 Tips on Preparation
Here are my top five preparation tips for each subject of the FRM Part 1 based on the 2024 FRM Study Guide and I am sharing this based on how I prepared.
| FRM Part I Topic | Weightage | Estimated Questions (out of 100) | Difficulty |
|---|---|---|---|
| Foundations of Risk Management (FIRM) | 20% | 18–22 | 3 (Moderate) |
| Quantitative Analysis (QA) | 20% | 18–22 | 5 (High) |
| Financial Markets & Products (FMP) | 30% | 28–34 | 4 (Moderately High) |
| Valuation & Risk Models (VRM) | 30% | 28–34 | 5 (High) |
Foundations of Risk Management
1. Understand Key Concepts: I focus on grasping the foundational concepts like different types of risk, risk measurement, and the tools used for risk management. It’s important to comprehend how these concepts add value to an organization.
2. Study Governance Models: I delve into risk governance and corporate governance, paying close attention to the roles and responsibilities of the board of directors and risk committees.
3. Credit Risk Transfer Mechanisms: I dive deep into the mechanisms of credit risk transfer, such as credit derivatives and securitization, because understanding these concepts is crucial for the exam.
4. Ethics and Conduct: I familiarize myself with the GARP Code of Conduct and the ethical considerations in risk management since ethics questions are a significant part of the exam.
5. Review Case Studies: I study historical financial disasters and risk management failures to understand the practical applications and implications of risk management principles.
Key Subtopics
Risk types: Market, Credit, Liquidity, Operational, Legal, Reputational
Enterprise Risk Management (ERM) frameworks
Basel Accords overview
Role of Chief Risk Officer (CRO)
Risk appetite, risk tolerance
Behavioral finance biases
Lessons from failures (Barings, LTCM, 2008 crisis, Archegos)
Learning Objectives (LOs)
Define risk and differentiate types of risk
Explain risk governance & the role of boards
Identify behavioral biases & risk culture failures
Interpret historical failures and their impact on risk management
Quantitative Analysis
1. Probability and Statistics: I master discrete and continuous probability distributions and learn how to estimate parameters of these distributions.
2. Regression Analysis: I gain a thorough understanding of linear regression, including both simple and multiple regressors, and how to apply these techniques to risk management scenarios.
3. Time Series Analysis: I learn the fundamentals of time series analysis and forecasting, making sure I’m proficient in modeling both stationary and non-stationary time series.
4. Simulation Methods: I study Monte Carlo simulation and bootstrapping techniques, focusing on their applications in risk management.
5. Machine Learning Basics: I get a basic understanding of machine learning methods and their applications in risk management, including the differences between various machine learning models.
Key Subtopics
Probability distributions (normal, lognormal, t-distribution)
Sampling, hypothesis testing
Correlation, regression, R², multicollinearity
Time-series modeling (AR, MA, ARMA)
Mean-variance optimization
Basic calculus for finance
Monte Carlo simulation
Maximum likelihood estimation (MLE)
Learning Objectives
Compute and interpret statistical measures
Apply regression models to financial data
Understand volatility modeling and forecasting
Use quantitative tools to support VaR and risk models
Financial Markets and Products
1. Market Structure: I understand the structure and mechanics of both over-the-counter (OTC) and exchange markets.
2. Derivatives: I study the valuation and mechanics of forwards, futures, swaps, and options, and learn how to apply these concepts to hedging strategies.
3. Interest Rates: I learn about interest rates and measures of interest rate sensitivity, including concepts like duration and convexity.
4. Foreign Exchange: I understand foreign exchange risk and how to manage it, including multicurrency hedging strategies.
5. Securities: I study the structure and characteristics of corporate bonds and mortgage-backed securities (MBS).
Key Subtopics
Derivatives:
a. Forwards, Futures, Options, Swaps
b. Greeks, Option pricing basics
Fixed income:
a. Yields, Duration, Convexity
Structured products:
a. MBS, ABS, CDOs
FX markets:
a. Spot, forward rates, swaps
Commodities markets
Trading strategies & hedging
Learning Objectives
Explain how derivative markets work
Demonstrate knowledge of pricing relationships
Evaluate risks in various asset classes
Understand structured credit products
Valuation and Risk Models
1. Value-at-Risk (VaR): I gain a thorough understanding of VaR, including different estimation methods and its application in risk management.
2. Volatility and Correlation: I learn methods for estimating volatility and correlation and understand their implications in risk models.
3. Economic and Regulatory Capital: I study the concepts of economic capital and regulatory capital, including stress testing and scenario analysis.
4. Option Valuation: I understand option valuation models, including binomial trees and the Black-Scholes-Merton model.
5. Fixed-Income Valuation: I learn about the valuation of fixed-income instruments, such as bonds, and the application of concepts like duration and convexity in hedging.
Key Subtopics:
VaR (Value at Risk) models
- Parametric (variance-covariance)
b.Historical simulation
c. Monte Carlo VaR
Expected Shortfall (ES)
Stress testing & scenario analysis
Credit risk modeling
Black-Scholes model
Yield curves, interest rate models
Backtesting models
Model risk & validation
Learning Objectives
Compute VaR using various methods
Conduct backtesting & evaluate model performance
Apply valuation models under different assumptions
Understand limitations of risk models
These tips have been invaluable in helping me focus on the key areas for each subject and prepare effectively for the FRM Part 1 exam.
FRM Level 2 Syllabus- 5 Tips on Preparation
So, again let me dive into sub basics of FRM level 2 subjects, which will give you an insight on the expectation.
| FRM Part II Topic | Weightage | Estimated Questions (out of 80) | Difficulty |
|---|---|---|---|
| Market Risk Measurement & Management | 20% | 15–18 | 5 (High) |
| Credit Risk Measurement & Management | 20% | 15–18 | 5 (High) |
| Operational Risk & Resilience | 20% | 15–18 | 4 (Moderately High) |
| Liquidity & Treasury Risk Measurement | 15% | 11–13 | 4 (Moderate to High) |
| Risk Management & Investment Management | 15% | 11–13 | 3 (Moderate) |
| Current Issues in Financial Markets | 10% | 7–9 | 2 (Low to Moderate) |
Market Risk Measurement & Management
Out here VAR(value at risk is a major concept). And in my own experience working with hedge funds, have realised the importance of VAR. If you want to understand the basic meaning, then basically VAR is answering the following questions;
- How much can you loose at a given unforeseen event.
- What is the probability of it
- What would be the probably losses that might be caused with probabilities.
Key Subtopics
Market risk frameworks
Risk factor identification
Volatility modeling (EWMA, GARCH)
Incremental VaR, Component VaR
Backtesting market risk models
Interest rate & equity risk modeling
FRTB (Fundamental Review of the Trading Book)
Learning Objectives
Implement advanced market risk frameworks
Compute market risk capital under Basel rules
Design backtests for VaR/ES models
Credit Risk Measurement & Management
So, in my opinion this is just an extension of Market risk topic, however it particularly discussed the credit side. The major topics like credit VAR, Default risk is covered in this content. You should try to understand this content more from derivatives and securitisation.
Key Subtopics
Default probability (PD), LGD, EAD
Credit VaR
Structural models (Merton model)
Reduced-form credit models
Credit rating models
Counterparty Credit Risk (CVA/DVA)
Credit derivatives (CDS, CDOs)
Learning Objectives
Quantify credit risk using multiple approaches
Understand credit exposure in derivative transactions
Apply credit portfolio models
Operation Risk
Apart from the very generic non finance related topics like cyber security risk. One of my favourite discussions is related to risk adjusted performance measure. For example; Risk adjusted Return on capital, which takes into consideration the profits considering the operating costs and losses.
Key Subtopics
Basel OpRisk standards
Scenario analysis for OpRisk
Cybersecurity risk
Third-party risk
Business continuity planning (BCP)
Risk control & mitigation
Key Risk Indicators (KRIs)
Fraud & internal control failures
Learning Objectives
Identify OpRisk sources & mitigation strategies
Build OpRisk measurement frameworks
Assess BCP & resilience models
Liquidity and Treasury Risk Measurement & Management
This topic focussed on the aspects of liquidity and contingencies that a business should build. The content digs into advance topics like asset liability management.
Key Subtopics
Liquidity risk types (funding, market)
LCR, NSFR (Basel liquidity metrics)
Cash-flow modeling
Treasury operations
Asset-Liability Management (ALM)
Stress testing liquidity
Contingency funding plans
Learning Objectives
Evaluate liquidity gaps
Apply Basel liquidity risk metrics
Assess treasury & ALM risks
Risk Management & Investment Management
So these reading are more tilted towards portfolio management theories. Like efficient theory hypothesis, risk budgeting etc.
Key Subtopics
Portfolio construction
Hedge funds, private equity, real assets
Performance measurement & attribution
Risk budgeting
Factor models
Active vs passive management
Tail risk hedging strategies
Learning Objectives
Apply risk budgeting concepts
Use investment risk tools to manage portfolios
Understand portfolio hedging techniques
Current Issues in Financial Markets
What I like about this subject & topic is that it lets you dig deeper into the previous big failures in financial markets. Including the 2023 bank failures, Effect of AI, Block chain etc.
Key Subtopics
Climate risk
Geopolitical & macroeconomic risks
FinTech & digital banking
Crypto-assets & blockchain risk
ESG Risk frameworks
AI/ML in risk management
Global regulatory changes
Learning Objectives
Analyze emerging global risks
Understand new regulatory frameworks
Evaluate technology-driven risk challenges
Topic Weightage & Exam Strategy
FRM part 1 weightage:
| Topic | Weightage | Estimated Questions (2025) |
|---|---|---|
| Foundations of Risk Management (FIRM) | 20% | 18–22 questions |
| Quantitative Analysis (QA) | 20% | 18–22 questions |
| Financial Markets & Products (FMP) | 30% | 28–34 questions |
| Valuation & Risk Models (VRM) | 30% | 28–34 questions |
FRM part 1 exam strategy (High scoring approach)
1. Master the “Big Two”: FMP + VRM (60%)
These two sections dominate the paper. Focus on:
Derivatives (Options, Futures, Swaps)
Greeks, VaR (Variance-Covariance, Historical, Monte Carlo)
Fixed income, bonds, forwards
Tip: Solve numericals daily, FRM P1 is heavily calculation-based.
2. Strengthen Quantitative Analysis (20%)
Key topics:
Probability, statistics, distributions
Hypothesis testing
Linear regression
Time series basics
Strategy: Memorize formulas + practise calculator shortcuts.
3. Secure easy marks from FRM Foundations (20%)
Conceptual but scoring:
Risk types
Risk governance
Basel regulations
Code of conduct (GARP ethics)
4. Use the 40-30-30 Study Formula
40% of time → FMP & VRM
30% of time → Quant
30% of time → FRM Foundations
5. Take 5–7 Full-Length Mock Tests
These build speed and accuracy, FRM is a 4-hour exam with 100 questions.
FRM part 2 topic weightage:
| Topic | Weightage | Estimated Questions |
|---|---|---|
| Market Risk Measurement & Management | 20% | 15–18 questions |
| Credit Risk Measurement & Management | 20% | 15–18 questions |
| Operational Risk & Resilience | 20% | 15–18 questions |
| Liquidity & Treasury Risk Measurement | 15% | 11–13 questions |
| Risk Management & Investment Management | 15% | 11–13 questions |
| Current Issues in Financial Markets | 10% | 7–9 questions |
FRM part 2 exam strategy
1. Focus on Market & Credit Risk (40%)
Heavily weighted and technical:
Merton model
Credit VaR
KMV
Market risk frameworks
Backtesting, stress testing
2. Operational Risk + Liquidity Risk (35%)
These are very theory-heavy but scoring:
LDA (Loss Distribution Approach)
Scenario analysis
LCR, NSFR, liquidity stress metrics
3. Investment Risk (15%)
Important for real-world portfolio management:
Active vs passive investment risk
Performance attribution
Hedge fund risk
4. Current Issues (10%): Quick Wins
Relatively easier:
Recent regulatory updates (Basel IV, IFRS updates)
Fintech risk
Climate/ESG risk
Reading summaries is enough.
5. Strategy to Clear FRM Part 2
Use a notes-first study system (summaries → questions → mocks).
Complete every chapter’s end-of-chapter questions.
Target minimum 60–65% accuracy in mocks before exam day.
Pay attention to concept linkages (e.g., liquidity ↔ credit ↔ market risk).
Common Mistakes & How To Avoid Them
1. Not Following the Official GARP Learning Objectives (LOs)
Mistake: Studying blindly from coaching notes or videos without checking the updated LOs.
How to Avoid:
1.Always download the latest FRM Learning Objectives from GARP.
2.Map your study plan to the LOs to ensure full syllabus coverage.
2. Ignoring High-Weightage Topics
Mistake: Spending too much time on low-weight chapters or easy theory.
How to Avoid:
1.Prioritize FMP + VRM for Part I and Market + Credit Risk for Part II.
2.Follow the 60–40 rule: 60% time on high-weight areas, 40% on the rest.
3. Memorizing Instead of Understanding Concepts
Mistake: Trying to mug up formulas without understanding application.
How to Avoid:
1.Focus on why a formula works, not just the steps.
2.Solve practical risk management problems, not just multiple-choice questions.
4. Not Practicing Enough Numericals
Mistake: FRM Part I is calculation-heavy, yet many students avoid lengthy problems.
How to Avoid:
1.Practise VaR, duration/convexity, derivatives pricing, regression, and probabilities daily.
2.Use financial calculator shortcuts (BA II Plus / HP 12C).
5. Neglecting Mock Exams
Mistake: Only studying theory without testing exam conditions.
How to Avoid:
1.Take 5–7 full-length mock exams per part.
2.Analyze errors and build speed (FRM requires 2.4 minutes per question).
6. Poor Time Management During Preparation
Mistake: Starting late or studying without a plan.
How to Avoid:
1.Follow a 3-month, 4-month, or 6-month structured study plan.
2.Allocate weekly targets for chapters, revision, and mocks.
7. Ignoring Revision / Relying on Last-Minute Cramming
Mistake: Completing the syllabus but skipping revision.
How to Avoid:
1.Keep 3–4 weeks for revision.
2.Review formulas, key graphs, frameworks (Basel rules, VaR types, credit models).
8. Using Too Many Study Resources
Mistake: Switching between 4–5 different books, leading to confusion.
How to Avoid:
1.Stick to one primary resource (Schweser/BT/GARP Books).
2.Supplement only with question banks + mocks.
9. Skipping Practice Questions at the End of Each Reading
Mistake: Many candidates “read” but never “solve.”
How to Avoid:
1.Solve end-of-chapter questions for every reading.
2.Track your accuracy to measure progress.
10. Overlooking Weak Areas
Mistake: Avoiding difficult topics like regression, VaR, fixed income, credit risk.
How to Avoid:
1.Identify weak areas early.
2.Spend extra hours on those chapters instead of practicing only what you’re good at.
Many FRM candidates fail due to poor planning, lack of practice, ignoring high-weight topics, and insufficient mock testing. By focusing on the GARP Learning Objectives, solving numericals regularly, revising on time, and following a structured study strategy, students can significantly boost their chances of clearing FRM Part I and Part II on the first attempt.
Detailed 12-week study plan for Part I and 16-week plan for Part II
High yielding chapter
FRM Part I
- Duration & Convexity
- VaR (all methods)
- Regression & Time-series
- Derivatives pricing (forwards, futures, swaps)
- GARP Code of Conduct
FRM Part II
- FRTB (market risk capital)
- Credit VaR + Merton Model
- LDA (Operational Risk)
- Liquidity Risk (LCR & NSFR)
- Climate risk (newer trend)
Conclusion
The FRM syllabus is designed to build deep, practical expertise in financial risk management covering everything from quantitative foundations and financial markets to advanced topics like market, credit, operational, and liquidity risk. With clearly defined Learning Objectives updated regularly by GARP, the curriculum stays aligned with real-world industry trends, regulatory changes, and global best practices.
Whether you are preparing for Part I or Part II, understanding the syllabus structure helps you prioritize high-weightage topics, plan your study hours effectively, and focus on the analytical and conceptual skills the exam demands. With the right strategy, consistent practice, and a strong grasp of the core subjects, clearing the FRM exam becomes a realistic and rewarding goal.
By mastering the FRM syllabus, candidates not only pass the exam but also strengthen their career prospects in banking, fintech, consulting, trading, and global risk management roles making the FRM designation a powerful investment in long-term professional growth.
Frequently Asked Questions
At a very broad generic level, FRM is not harder than CFA, which is pretty clear by looking at the pass rates of FRM. FRM pass rates are at higher of 60% in part 2 and upwards of 40% in Part 1.
It can be easy if you have already done CFA level 1, because there are a lot of common topics. However, for a total beginner, it can be slightly difficult to create the perspective. Since you are directly getting into a more specialised content before covering the foundational content like CFA.
Any frm program study plan recommends at least 200 hrs of content preparation. Hence considering that you have 180 days and even if you just manage to maintain 2 hrs per day, then 6 months is more than enough.
FRM level 1 pass rate stands at around 45% .
FRM Part I focuses on the foundational tools and techniques used in risk management:
1.Foundations of Risk Management (risk types, governance, RAPM)
2.Quantitative Analysis (probability, statistics, regression, time series basics)
3.Financial Markets & Products (fixed income, derivatives, FX, securitization)
4.Valuation & Risk Models (VaR, models for pricing and risk measurement).
FRM Part II applies the Part I tools to practical risk domains:
1.Market Risk Measurement & Management
2.Credit Risk Measurement & Management (CVA, counterparty credit risk)
3.Operational Risk & Resiliency (LDA, scenario analysis)
4.Liquidity & Treasury Risk (LCR, NSFR, stress testing)
5.Risk Management & Investment Management (performance attribution, portfolio risk)
6.Current Issues in Financial Markets (regulatory changes, fintech/ESG risk).
1.FRM Part I: 100 multiple-choice questions, 4 hours.
2.FRM Part II: 80 multiple-choice questions, 4 hours.
Both exams are equally weighted (MCQs) and practice-oriented.
GARP runs multiple exam windows each year (check current calendar). Recent schedules show several sessions across the year (e.g., May, August, November windows, exact dates published by GARP). Always confirm dates and registration windows on the official FRM exam logistics page.
Industry guidance recommends 200–240 study hours per FRM part as a practical minimum for serious candidates; many candidates put in more depending on background and speed with quantitative topics. Plan a study schedule of 3–6 months depending on your pace.
Yes. Both FRM Part I and Part II are computer-based tests (CBT) administered at approved test centers. Expect on-screen timing, question navigation, and final answer submission rules per GARP exam policies.
GARP does not publish a fixed passing score; the exam uses scaled scoring and standard-setting across sessions. Candidates must achieve the minimum standard set by GARP (which can vary by session) to pass. Many prep providers publish estimates of typical pass thresholds, but these are approximations focused on mastering the curriculum and scoring consistently high in mocks.
Yes. GARP publishes a Learning Objectives (syllabus) document and updates it periodically (recent update noted Dec 1, 2024). Candidates should always download the latest Learning Objectives from GARP before studying.
