ASSOCIATE

PROFESSIONAL
RISK MANAGER
(ASSOCIATE PRM) CERTIFICATE PROGRAM

The Core Concepts

of Risk Management

CANDIDATE
GUIDEBOOK
 Associate PRM Candidate Guidebook — revised February 2020
©2015–2020 Professional Risk Managers’ International Association (PRMIA). All rights reserved.
Contents
How to Use this Candidate Guidebook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PRMIA Contact Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

About the Associate Professional Risk Manager

(Associate PRM) Certificate Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Program Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Associate PRM Certificate Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Enrollment Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Studying for the Associate PRM Examination . . . . . . . . . . . . . . . . . 6
Examination Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PRMIA Network Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PRMIA Standards of Best Practice, Conduct and
Ethics Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Examination Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Associate PRM Syllabus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Associate PRM Exam Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Test Length and Testing Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exam Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Calculators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Exam Language . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

The Certificate Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Is this the right certificate program for you? . . . . . . . . . . . . . . . . . . . . . 10
Refund Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Join the PRMIA Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Profile Details for PRMIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Program Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Profile Details for Pearson VUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The Certificate Path CONTINUED
Preparing for the Exam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Essentials of Risk Management, Second Edition . . . . . . . . . . . . . 14
Digital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Online Communities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
PRMIA Chapter Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Optional Supplemental Training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Scheduling Exams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Canceling or Rescheduling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Checking in for an Exam Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Exam Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Taking the Exams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Exam Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Retaking the Exams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Achieving “Holder” Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Maintaining Associate PRM Holder Status . . . . . . . . . . . . . . . . . . . . . . . 19

Associate PRM Syllabus and Reading Lists . . . . . . . . . . . . . . . . . . . . . . . . . 20

How to Use this Candidate Guidebook

T
he purpose of this Associate Professional Risk Manager (Associate PRM)
Candidate Guidebook is to ensure future and current candidates have the
information needed to pursue the Associate PRM Certificate.

Future candidates (those individuals Be sure to read this entire document

who have not yet enrolled in the to view important information that will
certificate program) may find important help you to be a successful candidate.
and detailed information regarding
We hope that you will join us in
the program to determine whether the
promoting the PRMIA certificate
Associate PRM is appropriate for their
programs as the standard for our
learning needs.
industry. Invite your peers to learn more
Current candidates (those who are about the PRMIA certificates by sharing
enrolled in the certificate program and the link bit.ly/PRMIAcertificates
are studying for or have scheduled in your social media profiles. Join
the examination) should refer to this the PRMIA Certificate Candidates
Candidate Guidebook to aid their Online Communities and share your
study plan. experiences with others on this
certificate path with you.

1
 PRMIA CONTACT INFORMATION

Inquiries related to PRMIA Membership or the Associate PRM program may be submitted using the inquiry
options shown below.

Inquiry Category Online Contact Us Form Email

Membership and renewal General Questions support@prmia.org

General questions about certificate General Questions support@prmia.org

Specific questions about the

PRM Certification Question certification@prmia.org
PRMTM Designation program

Specific questions about a PRMIA certificate

PRM Certification Question certification@prmia.org
program (Associate PRM, ORM, CCRM, MLARM)

PRM publications support

PRM Publications Support support@prmia.org
(Handbooks, Standards, Case Studies, etc.)

Exam results Exam Result Inquiries certification@prmia.org

Fees and refunds Billing Question support@prmia.org

PRMIA courses and training, including

Training Inquiries learning@prmia.org
member webinars

Continued Risk Learning (recertification) PRM Certification Question certification@prmia.org

Inquiries related to the certification process or requests for appeals

Many of your questions of results may be submitted by completing the Contact Us form titled
Exam Result Inquiries.
can be answered by
this Associate PRM Accommodation requests: Examinees who require specific test
Candidate Guidebook. environment accommodations may contact certification@prmia.org with
details of the specific accommodations required for testing.
If you have additional
questions please contact Report a potential violation of the PRMIA Standards of Best Practice,
us at certification@ Conduct, and Ethics via the PRMIA website.

prmia.org. Do not hesitate to contact certification@prmia.org or call +1-612-605-5370

or +44 020 7096 0827 for answers to any other questions.

© 2020 Professional Risk Managers’ International Association (PRMIA).

All rights reserved. Revised 2015, 2018, 2020
2
About the Associate Professional
Risk Manager (Associate PRM)
Certificate Program
T he Associate PRM program allows professionals to gain familiarity
with fundamental risk management methods and practices and
apply these in their roles in auditing, accounting, legal, research, and
In today’s volatile
financial market,
the need for risk
management.
management knowledge
Designed by industry leaders, Preparing and passing of the and understanding at all
the Associate PRM Certificate is Associate PRM exam is a robust levels of management is
intended for individuals with at effort, requiring a significant critical. Now more than
least two years of experience in commitment by the professional ever, it is essential to
the financial or risk management and their supporting organization. understand the multiple
profession. The return on investment is a
dimensions of risk in
professional achievement, which
The Associate PRM is a good order to manage risk
marks the progression of sound
primer for professionals who and gain a competitive
career building and fostering of
interface with risk management advantage.
one’s lifelong learning; critical in
disciplines on a regular basis and
our fast-paced and competitive
want to understand fundamental
global workforce.
risk management methods
and practices. We invite you to join PRMIA and
take the step to improve upon your
At PRMIA, our mission is to develop
knowledge and skills by becoming
and promote the risk profession and
an Associate PRM Certificate
work with global leaders, educators,
holder today.
practitioners, and teams, to set the
standard for our industry.

AS OF JANUARY 2020:
more than
1,300 individuals
in 73 countries
hold the PRMIA
Associate PRM
Certificate
3
 Who holds the
Associate PRM? Holders of the Associate PRM Certificate have demonstrated that they:

Associate PRM n Understand corporate governance, compliance, and risk management

Certificate holders n Are able to implement integrated risk management
have demonstrated
n Know how to measure, manage, and hedge market, credit (retail and
knowledge of financial
corporate), and operational risk
risk management
concepts and practices. n Are able to define the roles of board members and senior
It is intended for management in managing risk
professionals working n Understand industry standards and best practices of financial risk
within the risk function management, and risk management techniques in a non-quantitative
such as auditors, framework 
analysts, managers,
n Understand the concepts of risk and return, interest rate risk and
and consultants.
hedging, asset-liability management, market risk management,
retail and commercial credit risk management, operational risk
Current holders of management, and enterprise risk management
the Associate PRM
Certificate include staff n Are familiar with the structure and workings of various financial
markets, and the financial instruments used in risk management
from large banks and
corporations, advisory
services groups,
universities, government
agencies, and other non-
financial organizations.
Organizations
represented include
Ernst & Young (EY),
Standard Bank,
Postal Savings Bank
of China, Basycon
Unternehmensberatung
GmbH, and Absa.

Visit prmia.org/APRM
for a full list of Associate
PRM Certificate holders.

4
Program Design

T
he PRMIA certificate programs were developed under the guidance of the
PRMIA Education Committee. The subject matter included in all PRMIA
certificate programs is based on elements of the Professional Risk Manager
(PRM™) Designation. The intent is to provide specific and relevant topics for
individuals working in various areas of the financial services industry whose role
requires them to understand specific components of risk management.

Associate PRM Certificate

Requirements
The Associate PRM Certificate program consists of three core requirement areas:

1. PRMIA Network Requirement

2. PRMIA Standards of Best Practice, Conduct, and Ethics Commitment
3. Examination Requirement

The purpose and scope of each of these are described in detail in the
following sections.

There are no recertification requirements for any PRMIA certificate program.

ENROLLMENT PERIOD

The Associate PRM enrollment period is 12 months (365 days) and begins with
the date that the certificate program fee is paid.

While some Associate PRM candidates are ready to sit for their exam with little
study, the 12-month enrollment period is established to allow for a period to
study before the exam is attempted.

5
 STUDYING FOR THE ASSOCIATE PRM EXAMINATION

Enrollment into a PRMIA certificate program includes access to the digital textbook,
The Essentials of Risk Management, and web-based resources to aid Associate PRM
candidates in their study.

EXAMINATION PERIOD

The examination must be attempted within the 12-month enrollment period.

PRMIA NETWORK REQUIREMENT

In order to enroll in the Associate PRM program, a candidate must have an account
established at www.prmia.org. By creating an account, you become part of the
community of risk practitioners.

While PRMIA paid membership is not required to enroll or achieve a certificate,

it is highly encouraged as the PRMIA membership community includes access to
networking and learning events that will enhance your professional development goals.

To learn more about PRMIA membership visit www.prmia.org/membership.

PRMIA STANDARDS OF BEST PRACTICE,

CONDUCT, AND ETHICS COMMITMENT
As a candidate or a holder of any PRMIA certificate program, individuals must display
a commitment to the PRMIA Standards of Best Practice, Conduct, and Ethics. These
are assessed as part of the examination process.

To learn more about PRMIA Governance visit www.prmia.org/governance.

EXAMINATION REQUIREMENT

To achieve the Associate PRM Certificate, candidates must pass the Associate PRM
exam within 12 months of enrollment.

6
Associate PRM Syllabus

T
he Associate Professional Risk Manager (Associate PRM) syllabus addresses a
comprehensive set of knowledge expected of an associate risk manager.

The subject matter of the Associate PRM Certificate is broken down broadly
among eight major domain areas. Knowledge of these domains is assessed using an
examination that includes multiple choice test questions.

A detailed syllabus is provided in the appendix along with the required reading materials.

Associate PRM Exam Structure

T
he purpose of the Associate PRM examination is to assess the current knowledge
level of the Associate PRM syllabus domain areas in relation to the global
standard expected of an associate risk manager.

Knowledge is assessed by multiple-choice test questions that make up the examination.

The table below provides a summary of the eight major domain areas and how the
Associate PRM examination assesses these domains.

Number of
Domain Assessed Test Questions
A. Risk Management, Corporate Risk Management,
12
and Risk and Return Theory

B. Corporate Governance and PRMIA Standards 11

C. Introduction to Financial Markets 12

D. Interest Rate Return and Hedging with Derivative Instruments 8

E. Market Risk, Asset-Liability Management, Stress Testing,

12
and Scenario Analysis

F. Credit Scoring, Retail Credit Risk Management, Commercial

12
Credit Risk Management, Risk Management Practices

G. Operational Risk, Risk Capital Attribution and

11
Risk-adjusted Performance Measurement

H. Case Studies 12

TOTAL 90

7
 TEST LENGTH AND TESTING TIME

The testing time limit established for the Associate PRM examination allows for
sufficient time for all candidates to complete the exam.

Exam Title Test Length Testing Time Limit

(number of test questions)

Associate PRM examination 90 questions 3 hours

Candidates who need additional time or specific test environment accommodations

due to medical or other accommodation needs may contact certification@prmia.org
with details of the specific accommodations required. A staff member will review the
request and work with Pearson VUE to determine how best to meet the
accommodation requirements.

EXAM PLATFORM

The Associate PRM exam is computer-based, and questions are all multiple choice
with four options, and one option is the correct answer.

CALCULATORS

Calculators are not needed nor provided for the Associate PRM examination.

EXAM LANGUAGE

The Associate PRM exam is offered in the English language only.

8
9
 The Certificate Path

P
RMIA certificates are an excellent way to provide validation of your knowledge in
relation to risk management concepts.

To ensure you understand your path to the Associate PRM and allow you to feel
prepared for the examination, this section of the Guidebook describes the path for new
candidates in the program.

IS THIS THE RIGHT CERTIFICATE PROGRAM FOR YOU?

Choosing which PRMIA certificate to pursue is a personal one that depends on your
professional goals, your current knowledge or skill level, and how well that certificate
program will meet your learning needs.

When considering the Associate PRM program, one could consider the following:

n Do I need validation of my knowledge, or do I wish to have a professional

certification (a designation)?

n Am I knowledgeable of the topics shown in the Associate PRM syllabus?

n Is the certificate program recognized in the regions where I work?

n Does my employer or potential employer recognize the importance of

continued education through the study for a certificate?

If you are ready to begin your Associate PRM Certificate, continue on for information
about enrolling into the program.

REFUND POLICY
The Associate PRM Certificate program fee is not refundable or transferable. The
information provided in this Guidebook and online is intended to ensure candidates
enrolling in the certificate program are well informed about the requirements and fees
before applying for the program. For more information visit the PRMIA Terms of Use.

10
JOIN THE PRMIA NETWORK
Potential candidates begin the enrollment process by becoming a PRMIA member1 or
creating an account at www.prmia.org.

To create an account:
n Navigate to www.prmia.org and click “Sign in”
n Click the “Create a new account” link
n Follow the on-screen instructions to become part of the PRMIA network

PROFILE DETAILS FOR PRMIA

It is critical that a complete PRMIA profile be provided when enrolling in a PRMIA

certificate program.

PRMIA uses the following details to send pre-approval for any exam authorizations to
Pearson VUE for testing purposes.
n Name as it appears on identification card
n Full preferred mailing address
n Phone number with country (or country code)

Information on PRMIA data privacy may be found in the Terms of Use.

1
PRMIA paid membership is not required to enroll or achieve a certificate program. Individuals who become Sustaining members receive member
pricing on the certificate program and any related fees. By joining the PRMIA membership community you receive access to networking and learning
events that will enhance your professional development goals. To learn more about PRMIA membership visit www.prmia.org/membership

11
 PROGRAM FEES
Visit www.prmia.org/APRM to enroll in the certificate program. Upon program
enrollment, candidates are required to indicate their readiness to begin the study
process by paying the Associate PRM program fee.

Included in the program fee is authorization for the required examination and access
to the digital textbook The Essentials of Risk Management, second edition.

With the program fee payment, instant access to the digital textbook is
provided. Instructions on how to access this resource are provided in the order
confirmation email.

Within 2–3 business days of paying the program fee, an email notification will be sent
that includes instructions on how to schedule the required examination.

PRMIA has contracted with Pearson VUE to administer the Associate PRM examination
at its test centers around the globe. Follow the instructions in the email to create an
account with Pearson VUE.

PROFILE DETAILS FOR PEARSON VUE

Once a candidate receives an email notification that the exam authorization has been
submitted to Pearson VUE, an account must be created with Pearson VUE, unless one
already exists.

When creating a new account with Pearson VUE, candidates must enter their profile
details as they appear in their PRMIA profile; these details are used to link their exam
records at Pearson with their records at PRMIA.

12
PREPARING FOR THE EXAMS
The Essentials of Risk Management, second edition, along with web-based resources, are
provided to all Associate PRM candidates to allow them to study and prepare for the
examination.

The reading materials are designed for self-study.

Optional training courses are available to help prepare for the examination — these
are not required to achieve the Associate PRM but are available for candidates who
wish to have additional support in their learning path.

13
 THE ESSENTIALS OF RISK MANAGEMENT, second edition

The Essentials of Risk Management, second edition, edited by Michel Crouhy,

Dan Galai, and Robert Mark (McGraw-Hill, 2014, ISBN 0-0-7181851-0).

Written for risk professionals and non-risk professionals alike, this easy-to-
understand guide helps readers meet the increasingly insistent demand to
make sophisticated assessments of their company’s risk exposure.  It provides
the latest methods for measuring and transferring credit risk, increase risk-
management transparency, and implement an organization-wide enterprise risk
management approach.

DIGITAL RESOURCES

The additional required reading materials and web resources are provided at
www.prmia.org/APRM.

n Abridged excerpts from the PRMIA Guide to Financial Markets (McGraw-Hill

© 2008)
n Professional Risk Manager (PRM) Handbook, Volume III, Book 3, chapter III.B.1,
Credit Risk Management (PRMIA Publications © 2004)
n The Evolution of Counterparty Credit Risk Management, written by David M. Rowe
(Risk Magazine © 2003)
n The PRMIA Standards
• PRMIA Bylaws
• PRMIA Standards of Best Practice, Conduct and Ethics
• PRMIA Governance Principles
n PRMIA Case Studies
n Group of Thirty best practices

PRMIA
COMMUNITIES ONLINE COMMUNITIES

Sustaining Members have access to the PRMIA Online Communities. Communities

for current Associate PRM candidates studying for the examinations have been
established to allow candidates to engage with each other, ask questions of the PRMIA
Risk Leaders and Education Committee members, and seek advice that will help them
in their certificate path.

To join a PRMIA online community, candidates may sign into their PRMIA Sustaining
Member account, click “Network,” and then choose “Online Communities.”

14
PRMIA CHAPTER EVENTS

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 to all
PRMIA members, and constitute an excellent opportunity for professionals to stay
informed of the latest developments in risk management and measurement.

OPTIONAL SUPPLEMENTAL TRAINING

For candidates who would like more structure to their study and a guided process in
a learning community, PRMIA offers several self-study options through its learning
management system. Visit www.prmia.org/learning for details on optional training.

15
 SCHEDULING EXAMS
The Associate PRM examination is administered in a proctored environment at
Pearson VUE facilities around the globe.

Candidates schedule an examination by creating an account with Pearson VUE

or logging in to their existing account to view pre-approved exams at
www.pearsonvue.com/prmia.

Examinations are offered throughout the year. By selecting a test center within the
Pearson VUE account, centers with available test dates and times display.

Candidates are encouraged to review the important details about registration,

cancellation, identification requirements, and space availability in the Pearson
VUE account.

CANCELING OR RESCHEDULING
In recognition of the busy and changing schedules of risk managers, candidates may
change their exam appointment without charge through the Pearson VUE system at
www.pearsonvue.com/prmia.

All change requests must be made at least one business day before the testing
date or the entire exam fee will be forfeited.

All authorized exams have an expiration date. To view the exam expiration dates,
candidates may log into their Pearson VUE account and view the details of the
pre-approved exam.

All program and exam fees are final and non-refundable.

16
CHECKING IN FOR AN EXAM APPOINTMENT
On the date of the appointment, candidates should arrive at the testing center at least
15 minutes before the scheduled start time. Two forms of identification are required.
The first must be a current government-issued ID with a photograph and signature.

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
digital photograph.

Arrive on Time
It is very important that candidates arrive at the testing center early. Candidates who
arrive late to the testing center may not be permitted to test. The full fee for the exam
will be charged if candidates are not admitted for any reason. As these centers offer
exams for other organizations, 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.

EXAM SECURITY
The Associate PRM exam is conducted under secure conditions. Any attempt by
candidates to copy questions, by any means including organized memorizing, and
to distribute these questions to other individuals, will be treated as unethical
behavior and may result in penalties against the candidate, which could include
forfeiture of any PRMIA certificates, exam authorizations, and possible expulsion from
PRMIA. Incitement to copy and usage of copied questions may also result in the
same penalties.

TAKING THE EXAMS

Associate PRM candidates have 12 months from the date the program fee is paid to
take the examination.
n Candidates may only sit for the Associate PRM examination once every

90 days.
n The exams are computer-based.
n Candidates will not receive any copies of the questions.
n No paper may be brought into the testing center; however, candidates are

provided with an erasable board upon request.

17
 Examination Administration
Each testing center has an administrator who assists exam candidates with the
testing process.

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 the tutorial has been
viewed, the candidate may begin the exam, which includes multiple-choice questions.
Sufficient time is allocated to read the tutorial and message and complete the exam.

The testing system allows marking and reviewing questions as long as time is
remaining. Candidates are encouraged to monitor and use their time effectively to
ensure they respond to all required test questions.

Incidents During an Exam Administration

In the event of an incident where the exam candidate believes the testing environment
is no longer compatible with good examination conditions (computer failure,
inadequate supplies, excessive noise, or any other circumstance), the candidate must
bring the incident to the attention of the examination proctor (invigilator) immediately
upon the incident being noticed — without continuing the exam.

Failure to inform the proctor in this manner will invalidate any subsequent candidate
incident reporting that cannot be substantiated by the test center.

Calculators
Calculators are not needed nor provided for the Associate PRM examination.

EXAM RESULTS
PRMIA will post exam results to candidates’ PRMIA profile no later than 15 business
days from the testing date. When available, candidates will receive an email from
certification@prmia.org with instructions on how to access your results.

RETAKING THE EXAMS

Candidates who do not pass an exam are eligible to retake the exam 90 days from
the date of the last exam. Individuals who require a retake will receive notifications
from PRMIA at the beginning of the month they are eligible to retake the exam with
instructions on how to purchase an exam retake.

Candidates may also contact support@prmia.org or submit a Contact Us inquiry to

request the retake exam purchase link.

18
ACHIEVING “HOLDER” STATUS
To achieve “holder” status, the Associate PRM candidate must successfully pass the
Associate PRM examination.

Holders may display the digital certificate issued as a result of their achievement. Holders
are also listed in the Associate PRM Directory.

MAINTAINING ASSOCIATE PRM HOLDER STATUS

There are no maintenance requirements for the Associate PRM Certificate program.

Holders are expected to continue to display a commitment to the PRMIA Standards of Best
Practice, Conduct, and Ethics.

To learn more about PRMIA Governance visit www.prmia.org/governance.

19
 APPENDIX

Associate PRM Syllabus and Reading Lists

1

SECTION A: RISK MANAGEMENT AND RISK AND RETURN THEORY

(12 out of 90 exam questions)

READING MATERIALS
The Essentials of Risk Management, second edition
n Chapter 1, Risk Management: A Helicopter View
n Chapter 2, Corporate Risk Management: A Primer
n Chapter 5, A User-Friendly Guide to the Theory of Risk and Return

SECTION A OBJECTIVES
n Understand a common definition of financial risk
n Understand the general role that a risk manager plays in a company,

financial or non-financial
n Understand some of the basic language used by financial risk managers,

including risk types such as market risk, credit risk, operational risk, reputation
risk, legal risk, business risk, liquidity risk
n Understand that a balance between risk and reward is a choice that can

be managed
n Understand some basic steps towards implementing a financial risk

management program
n Understand the concept of hedge accounting
n Understand the use of hedging at Merck as an example
n Understand the concepts of:
• Diversification
• The efficient frontier
• A call option’s value
• Risk-adjusted returns

1
The Epilogue, Trends in Risk Management, and chapter 15, Model Risk, of The Essentials of Risk Management, second edition
are not part of the Associate PRM required reading.

20
 SECTION B: GOVERNANCE AND RISK MANAGEMENT
(11 out of 90 exam questions)

READING MATERIALS
The Essentials of Risk Management, second edition
n Chapter 4, Corporate Governance and Risk Management

Web-based Resources
n PRMIA Standards of Best Practice, Conduct and Ethics

n PRMIA Governance Principles

n PRMIA Bylaws

SECTION B OBJECTIVES
n Understand the concept and importance of governance
n Understand the role of the Board of Directors
n Understand a typical financial risk management structure
n Understand basic risk management policies
n Understand the importance and meaning of an escalation policy
n Understand the role that external parties play in governance

(external audit, regulators, “the market”)

n Know the ten core PRMIA governance principles
n Understand how the PRMIA governance principles:
• Apply to the Board
• Apply to the finance and accounting function
• Apply to the risk management department
n Know the PRMIA Standards of Best Practice, Conduct and Ethics for

Professional Risk Managers

n Understand the positive role that risk management plays in the

business process
n Understand the basic operations of the PRMIA organization and practices

21
 SECTION C: INTRODUCTION TO FINANCIAL MARKETS
(12 out of 90 exam questions)

READING MATERIALS
Web-based Resources
Reading material extract from The Professional Risk Managers Guide to Finance
Theory and Application, published by McGraw-Hill (2008), ISBN 978-0-07-
154648-5
n Chapter 1, The Structure of Financial Markets, and Over-the-counter Markets
n Chapter 2, Money Markets
n Chapter 3, Bond Markets
n Chapter 4, Stock Markets
n Chapter 5, Foreign Exchange Markets
n Chapter 6, Futures Markets
n Chapter 7, Commodities Markets
n Chapter 8, Energy Markets

SECTION C OBJECTIVES
n Understand the types of instruments in the Money Markets
n Understand the basic characteristics of:
• Bond Markets
• Stock Markets
• Foreign Exchange Markets
• Futures Markets
• Over-the-counter (OTC) Markets
• Commodities Markets
• Energy Markets

22
SECTION D: INTEREST RATE RISK
(8 out of 90 exam questions)

READING MATERIALS
The Essentials of Risk Management, second edition
n Chapter 6, Interest Rate Risk and Hedging with Derivative Instruments

exclude boxes 6–2 and 6–3

SECTION D OBJECTIVES

n Understand the definition of interest rate risk

n Understand how changes in yields affect bond prices
n Understand how changes in the shape of the yield curve affect bond prices
n Understand the concepts of duration and convexity
n Understand the calculation of risk in a single security versus a portfolio of securities
n Understand the basic principles of
• A swap
• Puts and calls
n Understand the basic concept of
• Caps and floors
• Swaptions, exotics, and financial engineering

23
 SECTION E: MARKET RISK
(12 out of 90 exam questions)

READING MATERIALS
The Essentials of Risk Management, second edition
n Chapter 7, Measuring Market Risk: Value-At-Risk, Expected Shortfall, and

Similar Metrics
n Chapter 8, Asset/Liability Management
n Chapter 16, Stress Testing and Scenario Analysis

SECTION E OBJECTIVES
n Understand the concept of notional amounts of exposure
n Identify and define “The Greeks” as measures of market risk
n Understand the basic concepts behind Value at Risk
n Understand the use of Value at Risk in setting risk limits
n Understand different approaches to determining Value at Risk measures
n Understand situations in which these approaches work or don’t work
n Understand the concepts of stress testing and extreme events
n Understand the process of scenario planning
n Understand the definition and implications of liquidity risk
n Understand the role of the ALCO
n Understand the concept of funding gaps
n Understand the concept and implications of duration gaps
n Understand some measures of liquidity risk
n Understand the concept of funds transfer pricing

SECTION F: CREDIT AND RETAIL CREDIT RISK

(12 out of 90 exam questions)

READING MATERIALS
The Essentials of Risk Management, second edition
n Chapter 9, Credit Scoring and Retail Credit Risk Management
n Chapter 10, Commercial Credit Risk and the Rating of Individual Credits
n Chapter 11, Quantitative Approaches to Credit Portfolio Risk and

Credit Modeling

24
 SECTION F: CREDIT AND RETAIL CREDIT RISK (continued)
n Chapter 12, The Credit Risk Transfer Markets — and their implications
Only the following sections:
• Credit Derivatives: Overview
• End User Applications of Credit Derivatives
• Types of Credit Derivatives
• Credit Risk Securitization
• Securitization for Funding Purposes Only
• Conclusions

Web-based Resources
Reading material extract from The Professional Risk Managers’ Handbook: A
Comprehensive Guide to Current Theory and Best Practices, (2004). Edited by Carol
Alexander and Elizabeth Sheedy. PRMIA. ISBN 0976609703
n Credit Risk Management, by Jörg Behrens, PhD

Article reprinted with permission from Risk Magazine:

n The Evolution of Counterparty Credit Risk Management, by David M. Rowe

Copyright © 2003

SECTION F OBJECTIVES
n Understand the role that a credit officer plays

n Understand the unique concerns of retail credit risk

n Understand the concept of credit scores
n Understand the concepts of default, default rates, and loss rates
n Understand the factors involved in determining the value of a customer
n Understand how securitization can transfer risk
n Understand the concept of pricing risk
n Understand the role that rating agencies play in measuring credit risk
n Understand the basic credit ratings from these agencies
n Understand the implied impact of migration in credit ratings
n Understand internal rating scores and methods
n Understand basic financial measures in a loan risk assessment
n Understand the concept of loss given default
n Understand common types of counterparty credit risk
n Understand the use and importance of credit models
n Understand the calculation of risk in a single credit versus a portfolio of credits
n Understand the concepts behind credit VaR
n Understand the concepts behind CreditMetrics models
n Understand the concepts behind MKMV models
n Understand the concepts behind actuarial and reduced-form models
n Understand the basic types of credit derivatives
25
 SECTION G: OPERATIONAL RISK
(11 out of 90 exam questions)

READING MATERIALS
The Essentials of Risk Management, second edition
n Chapter 14, Operational Risk

exclude boxes 17–4 and 17–5

n Chapter 17, Risk Capital Attribution and Risk-Adjusted

Performance Measurement

SECTION G OBJECTIVES
n Understand what constitutes an operational loss and how might we quantify it
n Understand how operational events are linked to other risk types, such as

market, credit, liquidity, or reputation risk

n Understand the concept of a key risk indicator
n Understand the concept of a key risk driver
n Understand how to differentiate a key risk indicator from a key risk driver
n Understand a basic operational risk framework
n Understand an approach to implementation of an operational risk framework
n Understand how to implement a simple scenario-based process for assessing

and quantifying operational risks

n Understand how to assess risks relating to new business processes, products,

or change management initiatives

n Understand the concept of mitigation and examples of mitigation techniques
n Understand the role of insurance in operational risk transfer
n Understand the concept and definition of risk capital
n Understand core uses of risk capital
n Be able to compare and contrast risk capital and regulatory capital
n Understand the definition of RAROC
n Understand some uses of RAROC in business decision-making

26
 SECTION H: CASE STUDIES
(12 out of 90 exam questions)

READING MATERIALS
The Essentials of Risk Management, second edition
n Chapter 6, Group of Thirty Report


n Various sections — see table in the objectives for specific case study sections

Web-based Resources
n See table for specific case study titles

SECTION H OBJECTIVES
n Understand the core principles behind the Group of Thirty Report —

Recommendations on Derivatives Use

n Understand the specific lessons learned from the case studies listed in

the table below

Case Study Title The Essentials of Risk Downloadable

Lesson type Management, second ed. from prmia.org

General Metallgesellschaft Chapter 2, Box 2–2 ✔

Governance Orange County Chapter 6 ✔
Governance Riggs Bank ✔
Governance WorldCom ✔
Governance Bankers Trust ✔
Governance Daiwa ✔
Market Risk Long Term Capital Chapters 7 and 15
✔
Management

Asset-liability Management Continental Illinois Chapter 8, Box 8–4 ✔

Retail Credit Risk Bankgesellschaft Berlin Chapter 9 ✔
Credit Risk Credit Lyonnais ✔
Operational Risk National Australia Bank — Chapter 14, Box 14–1 ✔
FX Options

Operational Risk Barings Chapter 14, Box 14–1 ✔

Chapter 15

27
 Associate PRM Candidate Guidebook — revised February 2020
©2015–2020 Professional Risk Managers’ International Association (PRMIA). All rights reserved.