8020

The PRMIA (Professional Risk Managers' International Association) 8020 exam, focusing on Financial Risk Management, covers a broad range of topics. There's no single definitive list of "main points" as the weighting of topics can vary slightly from exam to exam, and the emphasis is on understanding the concepts and applying them rather than rote memorization of facts. However, some key areas consistently receive significant coverage:

I. Foundational Concepts:

• Market Risk: This is a major component. Expect questions on:
  • Value at Risk (VaR) – various methods (parametric, historical simulation, Monte Carlo), limitations, and backtesting.
  • Expected Shortfall (ES) – calculation and comparison to VaR.
  • Stress Testing – scenarios, sensitivity analysis.
  • Risk Measures – other relevant measures beyond VaR and ES.
  • Market risk models for different asset classes (equities, fixed income, derivatives).
• Credit Risk: Another significant portion. Expect questions on:
  • Credit ratings and their limitations.
  • Credit scoring models.
  • Credit risk mitigants (e.g., collateral, netting, diversification).
  • Credit derivatives (e.g., CDS).
  • Loan loss provisioning and regulatory capital requirements (Basel).
  • Expected Loss (EL), Unexpected Loss (UL), and Potential Loss (PL).
• Operational Risk: This section often includes:
  • Operational risk frameworks and methodologies (e.g., Basic Indicator Approach, Standardized Approach, Advanced Measurement Approaches).
  • Key Risk Indicators (KRIs).
  • Loss data collection and analysis.
  • Internal controls and risk mitigation strategies.
• Liquidity Risk: Questions will involve topics such as:
  • Liquidity risk measurement and management.
  • Liquidity stress testing.
  • Funding and liquidity ratios.
  • Liquidity risk mitigation strategies.
• Regulatory Capital: Understanding the basics of Basel accords and related regulations is vital.

II. Interconnectedness and Application:

The exam doesn't treat these areas in isolation. It heavily emphasizes the interconnections between different risk types and how they influence overall risk management strategies. You should be prepared to:

• Apply various risk management techniques to real-world scenarios.
• Compare and contrast different risk measures and models.
• Analyze risk data and make informed decisions.
• Discuss the limitations of different models and approaches.
• Explain how risk management impacts business strategy and decision-making.

III. Beyond the Specifics:

• Understanding the role of risk management in financial institutions. This is crucial, encompassing governance, risk appetite, and risk culture.
• Ethical considerations in risk management. Professional conduct and responsibility are frequently tested.

In summary: The PRMIA 8020 exam is not just about memorizing formulas. It assesses your comprehension of financial risk management principles, your ability to analyze situations, and your capacity to apply your knowledge to practical problems. Focus on understanding the "why" behind the concepts as much as the "how." Using the PRMIA study materials, practice questions, and mock exams is essential for success.