P R M C A N D I D AT E G U I D E B O O K

C E R T I F Y I N G O N LY T H E B E S T I N T H E R I S K P R O F E S S I O N

www.PRMIA.org

UPDATED-JUNE-2013
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CONTENTS

3 EXECUTIVE SUMMARY

4 PROGRAM DESIGN

6 PROGRAM DATES AND LOCATIONS

7 FEES AND REGISTRATION

8 TAKING THE PRM EXAM

10 PRM SYLLABUS

13 PREPARING FOR THE PRM EXAM

15 FREQUENTLY ASKED QUESTIONS

www.PRMIA.org

2 GUIDE TO THE PROFESSIONAL RISK MANAGER EXAM

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EXECUTIVE SUMMARY
The PRM program is a series of evaluation exams, designed for the development of
professional risk managers. Endorsed by leading university programs and industry firms,
it is the global standard for risk management professionals.

Built by a broad coalition of industry leaders to reflect the mission objectives of the asso-
ciation and to establish the leading form of education, validation and certification in the
Risk Management profession, the PRM counts candidates from over 95 countries, more
than any other risk certification program, anywhere.

The learning objectives for the PRM designation are to demonstrate knowledge and
understanding of:
n the classic finance theory underpinning risk management
n the foundations of risk measurement
n the foundation of option theory
n financial instruments and their associated risks and uses
n the daily form and function of trading markets
n risk management best practices
n lessons learned from failed systems and practices and major risk events
n best practices of governance, conduct and ethics

PRM EXAMS
To meet with the needs of busy professionals, the program provides for great flexibility,
offering one six-and-one-half-hour sitting for those wishing to complete evaluation in one
day, or four separate exams, varying in length from one to two hours, which can be taken
in any order over a period of up to two years. Passing all four exams leads to the award of
the PRM designation.

Exam Exam Name No. of Questions Time Allowed

I Finance Theory, Financial Instruments 36 2 hours

and Markets

II Mathematical Foundations of Risk 24 2 hours

Measurement

III Risk Management Practices 36 1.5 hours

IV Case Studies; Standards: Governance, 24 1 hour

Best Practices and Ethics

CROSS-OVER REQUIREMENTS FOR OTHER DESIGNATIONS

The program also recognizes the achievements of those who have other professional
designations and gives partial credit towards completion of the requirements for the
PRM designation. “Cross-over” candidates must pass the following exams:

CFA Charterholder Exams III and IV

PRMIA Associate PRM Exams I, II, and III

www.PRMIA.org

EXECUTIVE SUMMARY 3
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PROGRAM DESIGN
The Professional Risk Manager program has been designed for those:
n seeking professional certification
n looking to develop their skills or those of their staff
n looking for skills assessment of current employees
n looking for skills assessment of potential employees
n looking to communicate their knowledge and understanding of risk
management at a higher level to external and internal parties

The subject matter for the PRM program has been chosen based on relevance as well as
the ready availability of literature on the specific subjects.

Because we are a diverse association, with members from more than 175 countries, from
a variety of disciplines and varying areas of interest, the members of the Education and
Standards Committee along with our Academic Advisory Council have taken the job of
creating the framework to help us meet both the demands of current members as well as
developing the flexibility to grow and change together with our industry. Specifically, the
program has been designed with four of our mission objectives in mind:

TO BE A LEADER OF INDUSTRY OPINION AND A PROPONENT FOR

THE RISK MANAGEMENT PROFESSION
n By setting the higher standard in risk certification, we create standards of practice
and accountability that will define what Professional Risk Managers represent to
their colleagues and employers.

TO DRIVE THE INTEGRATION OF PRACTICE AND THEORY

n Neither theory nor practice will successfully develop to their potential without a
strong interaction between professionals in each area. The Professional Risk
Manager program contains subject matter drawn from risk management theory,
finance theory, the math underpinning risk measurement and applied question
matter from the practices of our profession. We will directly test for knowledge of
Finance and basic Math. Such knowledge is essential for risk managers as it forms
the foundation of risk measurement and management.

n We will also test for practical knowledge about markets: trading practices, intermedi-
aries, settlement and other conventions in specific markets. These market choices
will reflect the most global of markets as well as some more narrowly defined mar-
kets, with the latter giving us the opportunity to expose people to markets in which
they may not normally be active.

n Finally, to test for broad understanding of important risk management lessons, we

have included a section based on the time-tested case-study approach to learning.
Narratives of historical incidents where critical risk management issues have arisen
give us the opportunity to conduct a sort of pathology of events from around the
globe and to test members’ understanding of their root causes.

www.PRMIA.org

4 PROGRAM DESIGN
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TO BE GLOBAL IN OUR FOCUS, PROMOTING CROSS-CULTURAL
ETHICAL STANDARDS, SERVING EMERGING AS WELL AS MORE
DEVELOPED MARKETS
n Candidates for the PRM program come from more countries than any other risk
certification program, anywhere!

n The content of the PRM program is designed to be geographically neutral. Specific

sections focusing on “markets” are designed so that a variety of markets and market
lessons will be studied.

n The PRMIA Standards of Best Practice, Conduct and Ethics (Code of Conduct)
represents the standards of behavior that Professional Risk Managers promise to
their colleagues and employers. It has been written to cut across geographic and
cultural boundaries. All Professional Risk Managers will be required to study the
Code for the program and adhere to it to stay in good standing as a certified PRM.

n The PRMIA Governance Principles delineate seven key principles to best practice cor-
porate governance, all gleaned from governance documents developed by leading
public and private entities from around the world.

TRANSPARENT, NONPROFIT, INDEPENDENT, MEMBER-FOCUSED

AND MEMBER-DRIVEN
n PRMIA is a non-profit professional association under the full control of its members.
It does not have for-profit subsidiaries that may financially benefit individuals. Its
bylaws provide strong protection for member rights and the assets of the member-
ship. We are “of the risk professional, by the risk professional and for the risk
professional.”

n The program has been designed by industry leaders, all PRMIA members. Any
PRMIA member can submit questions for possible inclusion on the exams. Those
submissions go through a quality control screening by a number of members of
the Education and Standards Committee and, if approved, will make it to our exam
question database. By emphasizing peer input and peer review, this approach sets
a standard of measurement created by the industry.

n Candidates will study the Bylaws of PRMIA, so that they are familiar with our
structure and codification of member-leadership.

Be sure to read this entire document to view important

information that will help you to be a successful candidate.
We hope that you will join us in promoting the PRM
program as the standard for our industry and that you
will join in our efforts to ensure that it will continue to
meet the needs of our members and our industry.
www.PRMIA.org

PROGRAM DESIGN 5
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PROGRAM DATES AND LOCATIONS

For your convenience, the exams are offered on every business day of the week.

You may request to schedule your exams at any time. There is no advantage to taking
your exams on any particular date. Questions within exams are drawn from a large
database of questions and are administered randomly, creating thousands of unique
exam forms, all of comparable difficulty.

PRMIA uses the services of VUE, part of the Pearson Publishing family, to administer
the PRM exams. Pearson VUE is a professional testing firm that has nearly 5,000 testing
centers in more than 160 countries around the world.

Candidates have two years to pass all required exams of the PRM program.
You have up to two years to pass the required exams. The two-year period commences
from the date of the first successful PRM examination. Candidates may take exams over
more than a two-year period, but any exams passed more than two years in the past will
need to be retaken.

Please note some important details about registration, cancellation, identification

requirements and space availability in the Registration section found on page seven.

www.PRMIA.org

6 PROGRAM DATES AND LOCATIONS

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FEES AND REGISTRATION

FEES
The program allows for you to take one, two, three or all four exams at the same time.
Payment by credit card is required for online purchases. If you would like to make alterna-
tive arrangements, please contact [email protected].
SUSTAINING MEMBERS FREE MEMBERS
Any one exam US $175.50 US $195
Full program in one sitting US $450 US $500

* Additional discounts are available for Sustaining Members who are also full-time students or reside
in select low income countries.

Full Sustaining Memberships are US$200 annually; Sustaining Memberships

for individuals residing in select low-income countries are US$150 annually. You can
become a Sustaining Member online at http://www.prmia.org/membership

If you are interested in adopting the PRM as a corporate program, please contact
[email protected]. Special pricing on exam vouchers and preparatory materials
may be available to your company.

REGISTRATION
Registration for the PRM is handled using our online form at:
http://www.prmia.org/prm-exam/register

After you have registered for your exam on the PRMIA website, an automated email will
be sent to you with your voucher number(s). Once you have obtained your voucher
please visit www.pearsonvue.com/prmia and follow the instructions on how to
create an account, select your testing center online or for phone numbers where you can
be assisted by a representative of Pearson VUE. If you would like to purchase your vouch-
er by invoice, contact PRMIA at +1-612-605-5370 or [email protected].

Please be certain to have your PRMIA username available and to enter it correctly when
registering with Pearson VUE. Your exam results will be provided to that username via the
PRMIA website. It is your responsibility to ensure that your PRMIA username is entered
correctly when registering with Pearson VUE. Failure to do so may result in a delay of
exam results being reported to you or misreporting of exam results to another member.

Please note that all vouchers used to schedule exams have an expiration date. Should you
attempt to schedule or reschedule to a date beyond the expiration date of your voucher, it
will not be accepted by Pearson VUE. You may contact [email protected] for a new
voucher number, which will be provided to you without charge, subject to the condition
that the request is made within one year of the expiration date. After one year has passed
since the expiration date of the voucher, no replacements will be made.

90 DAY RULE
Please note that there is a strict PRMIA policy that exams may NOT be retaken within 90
days of a prior sitting. Any candidate attempt to transgress this policy by whatever means
may result in penalties against the candidate which could include forfeit of any PRMIA
certifications, vouchers, and possible expulsion from PRMIA. This rule applies equally
where PRMIA exams are available in other languages.

www.PRMIA.org

FEES AND REGISTRATION 7

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TAKING THE PRM EXAM

PERSONAL IDENTIFICATION
On the date of your appointment, arrive at the testing center at least 15 minutes before
the scheduled start time. You must bring two forms of identification with you. The first
must be a current government-issued ID with your photograph and signature.

Examples of Acceptable Forms Examples of Acceptable Examples of Unacceptable

of Government Issued ID Forms of Supplemental ID Forms of ID
n DRIVER’S LICENSE n PASSPORT n CREDIT CARD n LIBRARY CARD
n NATIONAL IDENTITY CARD
n EMPLOYEE ID CARD n SOCIAL SECURITY CARD
n MILITARY ID

In addition to providing identification during the admissions process, all authorized

Pearson VUE testing centers will take a digital signature using a signature pad and a digi-
tal photograph.

EXAM FORMAT
The exams are computer-based. You will not receive any copies of the questions. No
paper may be brought into the testing center, however, you will be provided with an
erasable board upon request.

Once admitted to the testing room, there will be a tutorial that introduces the functionality
of the exam and a brief message from PRMIA. After this has been viewed, you may begin
your exam. You will be asked multiple-choice questions, varying in quantity by exam.

Exam Exam Name No. of Questions Time Allowed

I Finance Theory, Financial Instruments 36 2 hours

and Markets

II Mathematical Foundations of Risk 24 2 hours

Measurement

III Risk Management Practices 36 1.5 hours

IV Case Studies; Standards: Governance, 24 1 hour

Best Practices and Ethics

If you take the full exam, it is broken into a three-and-one-half-hour section, covering
Exams I and II, then a two hour section for Exams III and IV. There is an optional break of
one hour after the first section. Once you have started your break you will not be able to
return to those questions. Following the break, you will have two hours to complete the
remaining two sections of the exam. Allowed times include the time spent on the tutorial,
thus the lesser time allocated when full exams are scheduled.

The testing system allows you to mark and review questions as long as time is remaining.
Please note that you are unlikely to finish your exams with substantial extra time. You are
encouraged to use the tutorial in an expedient manner, but sufficient time is allocated for
you to complete the tutorial and each exam.

www.PRMIA.org

8 TAKING THE PRM EXAM

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CALCULATORS
An online scientific calculator, Texas Instrument TI308XS, is part of the test delivery
system. A user guide for the calculator can be found at: http://education.ti.com/guide-
books/scientific/30xmv/TI30XSMultiViewGuide_en.pdf
No other materials may be brought into the exam room with you. It is suggested that
candidates purchase the hand-held version (TI-30XS) to fully familiarize themselves with
the calculator.

ARRIVE ON TIME
It is very important that you leave enough time to arrive at the testing center early.
Candidates that arrive late to the test center may not be permitted to test. The full charge
for the exam will be made if you are not admitted for any reason. As these centers offer
exams for other organizations as well, not everyone in the room will be taking the same
exam, so no assumptions should be made about when other candidates enter or leave the
testing center.

EXAMINATION ADMINISTRATION
Each testing center has an administrator who can assist candidates with any questions that
they may have. In the event of any incident (computer failure, inadequate supplies, exces-
sive noise, or any other circumstance) which the candidate believes is not compatible with
good examination conditions, this must be brought to the attention of the examination
proctor immediately upon the incident being noticed – without continuing the exam.
Failure to inform the proctor in this manner will invalidate any subsequent candidate inci-
dent reporting which cannot be substantiated by the test center.

EXAM RESULTS
Your exam results should be available within 15 business days of your test date and will be
delivered to you via the PRMIA website which you can access by signing in to your PRMIA
member page, go to "Membership" then "PRM society" and finally my "PRM Profile".

CANCELLATIONS/CHANGES
In recognition of the busy and changing schedules of risk managers, you may change your
exam appointment without charge through the Pearson VUE system at
www.pearsonvue.com/prmia. Please note that all change requests must be made at least
one business day before the testing date or the entire exam fee will be forfeited.
Please note that all vouchers used to schedule exams have an expiration date. Should
you attempt to reschedule to a date beyond the expiration date of your voucher, you may
contact [email protected] for a new voucher number, which will be provided to you
without charge, subject to the condition that the request is made within one year of the
expiration date. After one year has passed since the expiration date of the voucher, no
replacements will be made.
Because of the flexibility in rescheduling, exam fees are non-refundable.

EXAM SECURITY
The PRM exam is conducted under secure conditions. Any attempt by candidates to copy
questions, by any means including organised memorizing, and to distribute these ques-
tions to other individuals, will be treated as unethical behaviour and may result in penalties
against the candidate which could include forfeit of any PRMIA certifications, vouchers,
and possible expulsion from PRMIA. Incitement to copy, and usage of copied questions
may also result in the same penalties.
www.PRMIA.org

TAKING THE PRM EXAM 9

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PRM SYLLABUS
The subject matter of the PRM program is broken down broadly as:

Exam Topic Weighting

I Finance Theory, Financial Instruments and Markets 30%
II Mathematical Foundations of Risk Measurement 20%
III Risk Management Practices 30%
IV Case Studies; Standards: Governance, Best Practices and Ethics 20%

The complete syllabus is outlined below, including the weighting of each section.

EXAM I – FINANCE THEORY, FINANCIAL INSTRUMENTS

AND MARKETS ( APPROX . 650 PAGES OF REFERENCE MATERIAL CONTAINED IN
PRM H ANDBOOK V OLUME I: B OOKS 1, 2 & 3)
View Self Study Guide-Exam I at:
http://www.prmia.org/sites/default/files/references/PRMStudyGuideExam1.pdf

FINANCE THEORY 36%

n Risk and Risk Aversion

n Portfolio Mathematics

n Capital Allocation

n The CAPM and Multifactor Models

n Basics of Capital Structure

n The Term Structure of Interest Rates

n Valuing Forward Contracts

n Basic Principles of Options Pricing

FINANCIAL INSTRUMENTS (DESCRIPTIVE AND PRICING KNOWLEDGE) 36%

n General Characteristics of Bonds

n The Analysis of Bonds

n Futures and Forwards-

n Swaps

n Vanilla Options

n Credit Derivatives

n Caps, Floors and Swaptions

MARKETS 28%
n The Structure of Financial Markets

n Money Markets

n Bond Markets

n Foreign Exchange Market

n Stock Markets

n Futures Markets

n The Structure of Commodities Markets

n Energy Markets

www.PRMIA.org

10 PRM SYLLABUS
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EXAM II – MATHEMATICAL FOUNDATIONS OF RISK MEASUREMENT
( APPROX . 200 PAGES OF REFERENCE MATERIAL FOUND IN PRM H ANDBOOK V OLUME II)
View Self Study Guide-Exam II at
http://www.prmia.org/sites/default/files/references/PRMStudyGuideExam2.pdf
FOUNDATIONS 4%
n Symbols and Rules

n Sequences and Series

n Exponents and Logarithms

n Equations and Inequalities

n Functions and Graphs

DESCRIPTIVE STATISTICS 8%
n Data

n The Moments of a Distribution

n Measures of Location or Central Tendency

n Measures of Dispersion

n Bivariate Data

CALCULUS 21%
n Differential Calculus

n Higher-Order Derivatives

n Financial Applications of Second Derivatives

n Differentiating a Function of More than One Variable

n Integral Calculus

n Optimization

LINEAR MATHEMATICS AND MATRIX ALGEBRA 21%

n Matrix Algebra

n Application of Matrix Algebra to Portfolio Construction

n Quadratic Forms

n Cholesky Decomposition

n Eigenvalues and Eigenvectors

PROBABILITY THEORY IN FINANCE 25%

n Definitions and Rules

n Probability Distributions

n Joint Distributions

n Specific Probability Distributions

REGRESSION ANALYSIS IN FINANCE 13%

n Simple Linear Regression

n Multiple Linear Regression

n Evaluating the Regression Model

n Confidence Intervals

n Hypothesis Testing

n Prediction

n Breakdown of OLS Assumptions

n Random Walks and Mean Reversions

n Maximum Likelihood Estimation

NUMERICAL METHODS 8%
n Solving (Non-differential) Equations

n Numerical Optimization www.PRMIA.org

n Numerical Methods for Valuing Options

PRM SYLLABUS 11
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EXAM III – RISK MANAGEMENT PRACTICES
( APPROX . 500 PAGES OF REFERENCE MATERIAL CONTAINED IN PRM H ANDBOOK V OLUME III AND WEB -
BASED RESOURCES )
For detailed Learning Outcomes View Self Study Guide-Exam III at
http://www.prmia.org/sites/default/files/references/PRMStudyGuideExam3.pdf

MARKET RISK 33.33%

n Market Risk Management

n Introduction to Value-at-Risk Models

n Advanced Value-at-Risk Models

n Stress Testing including Enterprise-wide Stress Testing

n Capital Allocation and Risk Adjusted Performance

n Liquidity Risk

CREDIT RISK 33.33%

n Credit Risk Management

n Foundations of Credit Risk Modelling

n Credit Exposure

n Default and Credit Migration

n Portfolio Models of Credit Risk

n Credit Risk Capital Allocation

OPERATIONAL RISK AND OTHER RISKS 33.33%

n The Operational Risk Management Framework

n Operational Risk Process Models

n Operational Value-at-Risk

n Information Risk

n Systemic Risk

EXAM IV – CASE STUDIES AND STANDARDS: GOVERNANCE,

BEST PRACTICES AND ETHICS
For detailed Learning Outcomes View Self Study Guide-Exam III at
HTTP://WWW.PRMIA.ORG/SITES/DEFAULT/FILES/REFERENCES/PRMSTUDYGUIDEEXAM4.PDF
( APPROX . 130 PAGES OF REFERENCE MATERIAL FOUND ON PRMIA WEBSITE AT http://www.prmia.org/cases-
tudies-standards)
CASE STUDIES 63%
n Barings

n NAB-FX Options

n Bankgesellscaft

n LTCM

n Bankers Trust

n Orange County

n Metallgesellschaft

n World Com

n Northern Rock

n Taisei Fire and Marine Insurance

n Fannie Mae/Freddie Mac

n China Oil

n Washington Mutual

STANDARDS: GOVERNANCE, BEST PRACTICES, ETHICS 37%

n PRMIA Bylaws

www.PRMIA.org n PRMIA Governance Principles

n PRMIA Standards of Best Practice, Conduct and Ethics

n Group of Thirty Derivatives Best Practices

12 PRM SYLLABUS
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PREPARING FOR THE PRM EXAM
Practicing risk managers are already preparing for the exams by going to work each day
where they interact with other professionals and read industry magazines, software
manuals, company policies and procedures, academic journals, websites and regulatory
notices. They attend risk committee meetings, prepare risk reports, give presentations and
write papers. They attend PRMIA chapter meetings, participate in on-line forums and attend
risk management conferences. All of these activities prepare candidates for the PRM exams.

REQUIRED READING
The Professional Risk Managers’ Handbook: A Comprehensive Guide to Current Theory and Best
Practices is the recommended reading material for candidates preparing for the exams of the
PRM certification program. The PRM Handbook consists of three volumes:
n Exam I PRM Handbook Volume I (set of three books)
n Exam II PRM Handbook Volume II
n Exam III PRM Handbook Volume III as well as to 3 papers available free in a digital

format on the PRMIA website and an additional 4 papers which are loaded to
one’s PRMIA Library when one purchases Volume III of the PRM Handbook.
n Exam IV Case Studies, Papers and PRMIA Governance and Standards of Best Practice,

Conduct and Ethics. All available free in a digital format on the PRMIA website
at http://www.prmia.org/casestudies-standards

Purchase your PRM Handbook at:

http://www.prmia.org/prm-exam/handbook

OPTIONAL STUDY MATERIALS

PRM DIAGNOSTIC EXAM
You may need to brush up on your risk management theory or on those areas you might
not yet have worked on. An online PRM Diagnostic Exam can be used to assess your cur-
rent skills as they relate to the PRM Syllabus and/or as a practice exam prior to taking the
PRM Exam(s).

PRM Diagnostic Exams and ePRM Coach are training products developed by KESDEE Inc, a
third party training provider, and do not reflect the same difficulty level as the actual PRM
Exams. They should be used as a complementary source of information and not as a suit-
able replacement for the official PRM Handbook.

Purchase your online Training Course or Diagnostic Exam at:

http://www.prmia.org/online-training/prm-exam

www.PRMIA.org

PREPARING FOR THE PRM EXAM 13

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Alternatively, you can do a self-assess-

ment by looking at the exam content
outlines to identify the topics you may
need to study. We suggest the following
resources to prepare for the exams:

PRM SELF-STUDY GUIDES

This is a five-volume detailed study guide, produced by experts in the field. It encourages
a structured learning approach to PRM exam preparation, whether alone or in self-study
groups. The guides are free of charge and available from the PRMIA site at:
PRM Self Study Guide - Exam I
PRM Self Study Guide - Exam II
PRM Self Study Guide - Exam III
PRM Self Study Guide - Exam IV
Sample Test Questions

The study guide is ordered by exam and provides advice and motivation on examination
techniques including a considered approach to modular multiple-choice timed exams. It
provides assistance in studying for the examinations, especially in the timing and
ordering of study, key facts of knowledge, the ease of obtaining the study text reference
and practice with worked examples. To help candidates test their knowledge, 40 sample
test questions are provided with answers given at the end.

ONLINE PRM TRAINING COURSES

Online training courses designed specially for the PRM exams are accessible through
the PRMIA web site. These courses have been developed and are administered by
third parties. You may find these to be very helpful supplements to your study
program. You can learn more about these courses at
http://www.prmia.org/prm-exam/classes

PRM TRAINING COURSES

Various universities and training companies are offering review courses for the PRM
program. They have submitted their programs to our Education Committee to ensure
that the subject matter matches the PRM syllabus. You can view them at:
PRMIA approved PRM Training Providers:
http://www.prmia.org/prm-exam/training

PRMIA CHAPTER MEETINGS

PRMIA has regional chapters around the world that host regular meetings on current risk
management topics. The speakers are leading industry figures from banks, exchanges,
regulators, academia, consultants, vendors, asset managers etc. The meetings are open
www.PRMIA.org to all PRMIA members, and constitute an excellent opportunity for professionals to stay
informed of the latest developments in risk management and measurement.

14 PREPARING FOR THE PRM EXAM

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FREQUENTLY ASKED QUESTIONS

Q: What is required to receive the PRM designation?
A: Candidates must demonstrate sufficient knowledge and understanding of the building
blocks essential for the successful practice of modern risk management by passing
exams in four specific areas. In addition, they must commit to uphold the highest
professional and ethical standards as defined by the PRMIA Standards of Best
Practice, Conduct and Ethics.

Q: I’ve looked at some other designations in risk management, what are the reasons
why so many people are choosing the PRM?
A: Here are ten reasons why:

REASON 1: ENDORSED BY LEADING UNIVERSITIES

The Professional Risk Manager (PRM™) designation is an independent validation of
skills and commitment to the highest standard of professionalism, integrity, and best
practices within the risk management profession. The PRM™ is the leading
certification for risk managers, having received public endorsements from top
university programs and businesses.

REASON 2: GLOBAL
Candidates from more than 195 countries are actively pursuing the PRM, more than
any other risk certification program. Global recognition means that the PRM is the
world’s most portable risk management certification.

REASON 3: ENDORSED BY LEADING BUSINESSES

Many companies have put their brand names on the line by publicly endorsing the
PRM exam. There are no such firms doing this publicly for any other risk manage-
ment certification program that we know of.

REASON 4: PREDICTIVE POWER

Because the PRM is broken into four exams, each of which must be passed to
attain the designation, you cannot use strength in one area, say Math or Finance, to
cover weaknesses in other area, say Risk Management. Exams with one overall score
cannot reliably validate each critical area of competence. This muddling creates
uncertainty about whether the candidate does indeed have the broad knowledge and
understanding that risk managers must bring to their job. The point of a certification
program is to remove such uncertainty.

REASON 5: THE PRM HANDBOOK

Written by over 35 leading authors, the PRM Handbook is available anywhere in the
world that has access to the Internet. It is currently used in over 105 countries, at 23 of
the world’s 25 largest banks, at all ten of the world’s largest financial services companies
and is the core text for a growing number of graduate programs in risk management.

www.PRMIA.org

FREQUENTLY ASKED QUESTIONS 15

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REASON 6: FLEXIBLE
Risk managers’ schedules are far from predictable, so you can take PRM exams any
business day of the year and in any order you wish. If last minute issues arise, you
can reschedule your exam without a charge.

REASON 7: RECOGNITION OF OTHER ACHIEVEMENTS

We provide partial credit to those that have demonstrated their skills through
attaining designations like the CFA or the Associate PRM.

REASON 8: NO MAINTENANCE FEES

Just because you are successful doesn’t mean that PRMIA should earn an annuity.
We will provide you with benefits as a successful PRM like training course discounts
and access to resources that are only for PRMs. You won’t need to pay us anything to
keep your designation active.

REASON 9: QUALITY
Because the PRM is delivered via computer, in controlled testing facilities, we are
able to monitor questions so that they truly reflect our syllabus and desired degree
of difficulty. In other words, our exam is designed, not just assembled.

REASON 10: RESPECT

The PRM is the most challenging certification program available for financial risk
managers. That’s why it is the only one to have been publicly endorsed by leading
universities and businesses. Holders of the PRM are easily distinguished for their
achievement and have the backing of PRMIA, the premier meeting place for the
risk profession.

Q: Between family and work, I don’t have time to prepare for lengthy exams.
Can you help me?
A: Of course. The PRM program is first and foremost designed to help you and the pro-
fession to advance. That’s our main goal. So, to help you with your busy schedule,
you can take the exams required at your pace, in any order, over a period of up to two
years. Individual exams vary in length from one to two hours, making them very easy
to fit into most business days.

Q: What are the exam dates?

A: You may take the exams on any business day. You may register for the time and date
or dates that are most convenient for you.

Q: What are the fees?

A: The program allows for you to take one, two, three or all four exams at the same
time. Payment by credit card is required for online purchases. If you would like to
make alternative arrangements, please contact [email protected].

SUSTAINING MEMBERS FREE MEMBERS

Any one exam US $175.50 US $195
Full program in one sitting US $450 US $500
* Additional discounts are available for Sustaining Members who are also full-time students or reside
in select low income countries.

Full Sustaining Memberships are US$200 annually; Sustaining Memberships

for individuals residing in select low-income countries are US$150 annually. You can
www.PRMIA.org become a Sustaining Member online at: http://www.prmia.org/membership.

16 FREQUENTLY ASKED QUESTIONS

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If you are interested in adopting the PRM as a corporate program, please contact
[email protected]. Special pricing on exam vouchers and preparatory materials
may be available to your company.

Q: Are group discounts available?

A: Discounts are also available for companies or institutions that wish to enroll 10 or
more candidates in any part of the program. The candidates need not sit at the same
time, and your group will have up to one year to use the testing vouchers purchased.
Contact our support team at [email protected] to learn more.

Q: Are there any prerequisites?

A: Membership in PRMIA is the only prerequisite. Visit www.prmia.org to become
a member.

Q: What is the format of the exams and how long are they?
A: The exams are all multiple choice questions. PRIMA’s computer-based method of
delivery of the exams allows us to evaluate very specific details about each question
administered, including down-to-the-second measurements of how long it takes most
candidates to answer each question. Exams vary in length based on these validated
testing times:

Exam Exam Name No. of Questions Time Allowed

I Finance Theory, Financial Instruments 36 2 hours

and Markets

II Mathematical Foundations of Risk 24 2 hours

Measurement

III Risk Management Practices 36 1.5 hours

IV Case Studies; Standards: Governance, 24 1 hour

Best Practices and Ethics

Complete PRM Exam 120 6.5 hours

Q: I just want to learn, not to be certified. Is this still for me?

A: Yes. There is no requirement that you complete all exams. If you want to improve
your knowledge and understanding, or want to train your staff, pick and choose the
areas that you think they should know and use our program to validate their success.
All financial market participants benefit from a better understanding of risk manage-
ment Case Studies. You might have your trading desk sit for Exam IV. Suppose some-
one is applying for an entry level job in your department. You can have them take any
one of the exams to determine how ready they are to become a risk manager. The
goal of our program is to advance you and the profession.

www.PRMIA.org

FREQUENTLY ASKED QUESTIONS 17

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Q: How do I register?
A: Registration is available online.
Go to http://www.prmia.org/prm-exam/register for details. Spaces at the testing cen-
ters will be reserved on a first-come, first-served basis, so you are encouraged to reg-
ister as soon as possible.

Q: What is the expected pass rate?

A: Pass rates vary by exam with Exams I and III having the lowest pass rates (around
60%). Overall, the success rate of candidates attempting to attain the PRM is about
50%. Your chances of success will depend upon several factors including the knowl-
edge and experience you have as well as the rigor of your preparation progress.

Q: What is the passing grade?

A: Candidates must score 60% or higher on each individual exam to pass.

Q: Where can I take the exams?

A: The exams are offered in all over the world in secure, clean and convenient testing
centers. Visit www.pearsonvue.com/prmia/locate to find specific addresses of
testing centers.

Q: What are the security arrangements?

A: Candidates will be required to present two forms of official identification when
arriving at the test center. Candidates must sign-in and sign-out of the testing center.
No papers may be brought into the examination room. Many rooms are videotaped
during testing and all are monitored by a proctor using a parabolic mirror or other
viewing device.

Q: What designation is awarded to successful candidates?

A: With the awarding of the certificate, successful candidates become a Professional
Risk Manager, or PRM, and will have a limited license to use the PRM insignia on
business cards, resumes and CV’s.

Q: Do you recognize other designations?

A: Holders of the CFA Charter or the Associate PRM Certificate will receive partial credit
towards the PRM designation. The credit applied is based on the quality and chal-
lenge of materials covered in each of those programs, the rigor of the testing versus
that required for the PRM designation and the ability to interpret results as being
equivalent to the requirements of the PRM. Details on which exams must be passed
are available on page three of this guide.

www.PRMIA.org

18 FREQUENTLY ASKED QUESTIONS

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Q: If I am successful, do I have to pay an annual fee to keep my designation?
A: No. Some organizations want you to pay them for your achievement. PRMIA wants to
encourage you to develop professionally and to attain the highest standard in the
industry. PRMIA will give to you special discounts and special resources as a PRM.

Q: Who has endorsed the PRM?

A: The PRM program has received the endorsements of leading university programs and
some of the leading firms in our business because it is simply a better test of skills
and it is available to members in all parts of the world. No other program has
received such public backing. You can also read the Testimonials and Case Studies of
some successful PRMs.

Q: I’m ready to register, what should I do?

A: Go to http://www.prmia.org/prm-exam/register and book your place.

www.PRMIA.org

FREQUENTLY ASKED QUESTIONS 19

T H E P R O F E S S I O N A L R I S K M A N A G E R S ’ I N T E R N AT I O N A L

A S S O C I AT I O N W A S F O U N D E D I N 2 0 0 2 A S A F R E E A N D

O P E N F O R U M P R O M O T I N G T H E H I G H E S T S TA N D A R D S

O F E D U C AT I O N , E T H I C S , A N D P R O F E S S I O N A L I S M

I N T H E G L O B A L P R A C T I C E O F R I S K M A N A G E M E N T.

www.PRMIA.org