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1980’s • Informal • Limited number of general market risk businesses • Globalization just starting
• Companies starting to play in more geographic markets
• More risk takers coming into market
1990’s • Derivatives coming to forefront • Emerging Market plays • Internet • Instantaneous communication • Enhanced systems and technology • Major corporate defaults and scandals • Internationalization of markets • Recognition of risk as a corporate function across departments • Hedge funds growth • Start of International banking regulation • Fall of Japan, Russian default
2000’s • Markets now global • Internet bubble burst • Regulators driving change • Systems link all parts of world • Country risks recognized as interdependent • Markets react similarly in seconds • Vendors offer global solutions • Risk-based capital • Increasingly sophisticated risk/derivative solutions • Complexities increase • Customer/shareholder uncertainty •Institutional funds flow into alternative investment products • Need for risk-based culture
Evolution of Risk Management
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• Understanding risks improves profitability • reduces uncertainty • encourages profitable risk taking • identifies unprofitable risk avoidance and offsets • improves investment decisions and capital allocation
• Focusing on Risk protects capital • helps prevent surprises • assists in eliminating undesirable risk concentrations
• Good risk management • improves confidence • enhances credibility
• Results • increased shareholder confidence • continued investment by third parties in company • additional opportunities presented by lenders and customers
Benefits of Investing in Risk Management
3
Risk Manager
Board of Trustees
Regulators
Company management •Front, mid and back office staff
•Information Technology
External vendors •Clearing brokers •Executing brokers •Prime brokers •Custodian
Clients
Risk Manager as Communicator
4
Mission Statement
To be the leading professional association for risk managers, managed by and for its members dedicated to the advancement of the risk profession through education, training and the promotion of best practices globally
Adopted by GARP’s Board of Trustees on February 11, 2003
Global Association of Risk Professionals, Inc.
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GARP Digital Library LLC • Supporting research and
continuing education
• GARP Risk Review
• Publishing
GARP Risk Academy LLC • Certificate in banking risk and
regulation
• Credit, Market, Operational & Treasury Risk diploma programs
• Energy diploma program
• “Customized” certification programs
GARP Center for the Study of Risk Management • Catalog of “staple” and advanced courses for financial professionals • Train-the-trainer programs • Workshops and training courses • Customized in-house training • e-learning • Continuing education
Global Association of Risk Professionals, Inc. • FRM® Program • Memberships • Conventions & events • Website • Career Center
Global Association of Risk Professionals, Inc.
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• World’s most prestigious global risk management certification program
• Practice orientated
• Determines a candidates ability to dynamically measure and manage financial risk in real-world settings • Benchmark’s whether individual is qualified to provide competent advice based on globally recognized industry standards
•Committee Chair: Dr. René Stulz, Everett D. Reese Chair Monetary Economics, Fisher College of Business, Ohio State University
6,535 FRM certified holders
Representing over 3,000 different institutions globally
3rd Edition
2nd Edition
Q & A Interactive CD
Financial Risk Manager (FRM®) Program
1st Edition
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Unprecedented Growth
108 262
769
1,238
2,958
3,584
4,369
5,726
6,689
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1997 1998 1999 2000 2001 2002 2003 2004 2005
As of 9/30
22% incre
ase
31%% incre
ase
139% increase
21% increase
17% increase
108 262
769
1,238
2,958
3,584
4,369
5,726
6,689
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1997 1998 1999 2000 2001 2002 2003 2004 2005
As of 9/30
22% incre
ase
31%% incre
ase
139% increase
21% increase
17% increase
Financial Risk Manager (FRM®) Program
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Companies With 5 or More FRM Candidates
Objective Evidence of FRM’s Benchmark Status
105
185
41 New In 2004
219
98New
In 2005
0
50
100
150
200
250
2003 2004 2005
18% Inc.
76% Inc.
Of the 64 companies from 2004 no longer represented by five or more candidates in 2005, 88% have at least two or more registered candidates this year.
Financial Risk Manager (FRM®) Program
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Administered at 64 locations around the world in 2005 Amman, Jordan Edinburgh, Scotland Madrid, Spain Seattle, Washington
Auckland, New Zealand Frankfurt, Germany Manila, Philippines Seoul, South Korea
Bahrain Gainesville, Florida Melbourne, Australia Shanghai, China
Bangalore, India Glasgow, Scotland Mexico City, Mexico Singapore
Bangkok, Thailand Hong Kong, China Milan, Italy Stockholm, Sweden
Beijing, China Houston, Texas Montreal, Canada Sydney, Australia
Beirut, Lebanon Istanbul, Turkey Moscow, Russia Taipei, PRC
Bermuda Jakarta, Indonesia Mumbai/Bombay, India Tel Aviv, Israel
Boston, Massachusetts Jamaica, West Indies Munich, Germany Tokyo, Japan
Cairo, Egypt Johannesburg, South Africa Muscat, Oman Toronto, Canada
Caracas, Venezuela Karachi, Pakistan New York City, New York United Arab Emirates
Charlotte, North Carolina Kuala Lumpur Nicosia, Cyprus Utrecht, Netherlands
Chicago, Illinois Kuwait City, Kuwait Paris, France Vancouver, Canada
Columbus, Georgia Lagos, Nigeria Prague, Czech Republic Warsaw, Poland
Columbus, Ohio London, England San Francisco, California Washington, D.C.
Dublin, Ireland Los Angeles, California Sao Paulo, Brazil Zurich, Switzerland
Financial Risk Manager (FRM®) Program
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• Certificate & Diploma Programs in Banking Risk and Regulation
• Diploma in Energy Risk Management
“Creating a Culture of Risk Awareness” Programs designed for the non-professional risk manager E.g., sales, accounting, technology, analysts, operations staff
• Course Syllabus reviewed by GARP global risk management experts
• Partnerships with local and regional organizations for course delivery
• Offered in local language
GARP Risk Academy
Committee Chairman • Banking Risk & Regulation Committee: Dr. Xavier Freixas, Dean, Business School, Universitat Pompeu Fabra • Energy Risk Management Committee: Dr. Craig Pirrong, Director of Energy Markets, C.T. Bauer College of Business, Univ. of Houston
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For the risk professional
Financial Risk Manager Program •FRM® Certification (6,535 holders globally)
Compulsory Familiarize students with framework for supervision of banks
+
Banking Risk & Regulation
Introducing basic risk concepts and understanding the need for regulating risk within a banking environment, including an overview of Basel
Certificate in Banking Risk & Regulation
(CBRR) =
Credit Risk &
Regulation
Operational Risk &
Regulation
Treasury Risk &
Capital Regulation
Market Risk &
Regulation
= DIPLOMA
1 of the following within 6 months of completing compulsory module
Examination Examination
Risk Governance &
Supervision
Examination
Examination
Examination
Examination
Intro. to risk & the reg. of banks
Risk-based regulation +
Physical Energy Markets
Examination
+ Energy Risk = Energy Risk
Diploma (ERD)
Managing Energy
Risk
Setting a global base of understanding
Creating a corporate culture of risk awareness for non-risk professionals throughout the entire organization
Setting a global base of understanding
Examination
Examination
GARP’s Professional Development & Credential Framework Setting Standards Around the World
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Digital resources for finance research and education
1. Accessible globally through GARP website 2. In partnership with the world’s largest business book
publishers 3. Books and articles reviewed and selected by GARP
risk management professionals 4. Robust searchable database 5. Create own e-book 6. Initial rollout in November 2005 with over 100 readings.
More than 750 readings expected by end of 2006
Publisher 1
Publisher 2
Publisher N
GDL Editorial
Committee
Individual User
University Course Pack
Corporate SubscriptionBank
Research Institution
• Powerful search capability• Informative abstracts• Convenient, immediate
download of pdf file(s)• Featured reading clusters
Publisher 1
Publisher 2
Publisher N
GDL Editorial
Committee
Individual User
University Course Pack
Corporate SubscriptionBank
Research Institution
• Powerful search capability• Informative abstracts• Convenient, immediate
download of pdf file(s)• Featured reading clusters
Digital Library Editorial Committee
Mr. Richard Apostolik, JD, MBA GARP President & CEO Dr. John Birge Univ. of Chicago Dr. Kobi Boudoukh Caesarea Center, IDC Dr. Carl Chiarella Univ. of Technology, Sydney Dr. Rudi De Koker Citigroup Dr. Dawie de Jongh North West Univ., South Africa Dr. Chris Donohue GARP MD, Digital Library Dr. Xavier Freixas Universitat Pompeu Fabra Dr. Michael Gordy US Federal Reserve Board Dr. Brett Humphreys Risk Capital Management Dr. Lars Jaeger Partners Group Dr. Timothy Krehbiel Oklahoma State Univ. Mr. William Martin Bank of America Dr. Fausto Membrillo-Hernandez IPAB Dr. Wilfried Paus Deutsche Bank Dr. Todd Petzel Azimuth Alternative Asets Dr. Enrique Schroth University of Lausanne Dr. Ken Singleton Stanford University Dr. René Stulz GARP Board, Ohio State Univ. Dr. Donald van Deventer Kamakura Corp. Dr. David Webb London School of Economics Dr. Michael Wong City Univ. of Hong Kong Dr. Sam Wong Chinese Univ. of Hong Kong
GARP Digital Library
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