All About PRM Exam I

The Professional Risk Manager (PRM) exam is a popular and globally-recognized certification for risk managers and others in the risk management field.

Once you complete your PRM certification, you become a Professional Risk Manager, and can officially use the PRM designation.

To earn your PRM designation, you need to pass the following four exams:

  • Exam I: Finance Theory, Financial Instruments and Markets
  • Exam II: Mathematical Foundations of Risk Measurement
  • Exam III: Risk Management Practices
  • Exam IV: Case Studies, PRMIA Standards of Best Practice, Conduct and Ethics, Bylaws

In this article, our focus will be on the PRM Exam I.

PRM Exam I, as the name suggests is the first exam in the series of four exams. The broad topic areas covered in this exam are: Finance Theory, Financial Instruments, and Financial Markets.

Exam Format

The PRM Level I exam is a multiple-choice exam. There are total 36 questions to be answered in 2 hours time.

This is an online exam that can be taken in more than 4,000 secure and convenient testing centers in over 160 countries. The exam’s global reach is one of the key reasons for its popularity. PRMIA has a tie-up with Pearson Vue that has testing centers around the world. The student just needs to find a testing center in their nearby locality, and register for the exam.

Exam Dates

Since it’s an online exam and can be taken at any test center, there is no fixed exam date. You can register and take the exam on any business day of the year. The results are usually made available to you within 15 days of taking the exam.

PRM Exam I Waiver

PRIMA also gives credit for many other degrees and certifications. So, if you have any of the following degrees you don’t have to write PRM Exam 1, and you can straight away write the next exam.

  • CFA Charter Holders
  • CIIA, CEFA Charter Holders
  • CQF Holders
  • Actuarial Fellows
  • CSI Financial Risk Management Graduates
  • CAIA Members

PRM Exam 1 Curriculum

The PRM Exam 1 curriculum revolves around three broad areas:

TopicWeightNo. of Questions
Finance Theory36%13
Financial Instruments36%13
Financial Markets28%10

Finance Theory: This section of PRM Exam I covers all the topics related to Finance Theory, which forms the basis for risk management. The key topics include, risk and risk aversion, portfolio mathematics, capital allocation, CAPM, multifactor models, capital structure, term structure of interest rates, valuing forward contracts, and options pricing.

Financial Instruments: The Financial Instruments section applies these theories learned in the previous section to the most commonly used financial instruments. You are required to have both descriptive and pricing knowledge of these financial instruments. The instruments covered include: bonds, futures and forwards, swaps, vanilla options, credit derivatives, and caps, floors and swaptions.

Financial Markets: In the Financial Markets section, first a general introduction to world financial markets is provided. They can be variously classified – geographically, by type of exchange, by issuers, liquidity and type of instruments – all are provided here. The importance of liquidity, the distinction between exchange and over-the-counter markets and the role of intermediaries in their various forms are explained in more detail. The financial markets discussed include: money markets, bond markets, foreign exchange market, stock markets, futures markets, commodities markets, and energy markets.

PRM Exam I is not a difficult exam, but the syllabus is quite broad and you need to have knowledge about a whole lot of topics. The questions will strictly be from the syllabus, so it’s important that you follow the syllabus and pay attention to the objectives. PRMIA provides the official PRM Handbook that’s a great resource to prepare for the PRM exam; however, some students find it a bit overwhelming. You can also use Finance Train’s free online material for the PRM Exam.

All the best for your exam prep! If you have any questions about the exam, please feel free to ask in the comments section below and I’ll be glad to answer.