In May 2018, I sent the attached 18-page memo called How to Fix the FRM to GARP’s leadership (including the Board of Trustees). As host of our forum for over a decade, I have a front-row seat into candidates’ experiences and their feedback; in particular, I’ve spent several hundred hours debugging syllabus material and practice questions. The primary motivation for the memo was the high error rate we’ve observed in the source material, in particular sample practice questions. Related, the anthology approach (i.e., differing authors) of the exam has created certain inconsistencies and ambiguities, many of which are detailed in the memo. As I wrote in the memo, “On behalf of my customers and myself, this memo has three goals. One, to warn you of reputational risks that are accruing to the FRM product, at least online. Two, to convince you there is an opportunity for improvement in the FRM product. Three, if those arguments are convincing, to learn that the Committee will take some concrete steps to make improvements. With that agenda, at the end of this memo, after asking important questions, I offer recommendations and suggestions.”
The irony of these quality problems is that they are mostly unnoticed by the majority of candidates who are too busy digesting the material in a first pass effort at comprehension. Rather, these issues have been noticed only by the more experienced and proficient candidates, who tend to arrive with prerequisites that enable them to discern defects. What I mean is, most candidates are just trying to learn how to calculate value at risk (VaR), for example, or credit value adjustment (CVA), it’s after you master them are you likely to noitce that GARP’s own approaches can be inconsistent. A key point that I have repeatedly emphasized to management, with actual examples, is that some inconsistencies ironically bias against better-prepared candidates; that is, some submitted questions have a perceived correct answer that is easier to identify if you know less (candidates who know more often tend to identify an alternative)! In any case, I assume that I do not need to defend high standards especially in the context of how much time and money must be invested by an FRM candidate.
This memo summarizes, on a certain level, my years long effort to contribute to the improvement of syllabus. I did receive a careful, thoughtful, and encouraging reply from Bill May (Global Head of Certifications and Education Program). My reply to his reply is appended, but due to privacy, his reply to me is not included. I’m sharing here now only because this phase has long-since concluded (months ago) and I am very much looking forward to seeing GARP’s release of the 2020 syllabus.
Supplementary notes can be added here, including code and math.