Importance of FRM & CFA in Banking system


Following several meltdowns in world economies and the advent of banking failures where subprime mortgage failures and NPA’s in banks are concerned, most leaders have started realizing the importance of implementing proper risk management in financial systems. Analysts today are analyzing uncertainties regarding future losses and future gains based on various models. Financial institutions have started focusing on various risk models for the sole purpose of calculating risk, and each model is strongly focused on risk mitigation strategies and risk tolerance in various sectors.

This change is increasingly visible in the Indian Banking system today, as is evident by the practice of major banking systems which has started implementing stress testing, VaR calculations, parametric and non- parametric approaches in their modeling. All Regulators in India namely RBI, SEBI, PFRDA, FMC & IRDA have broadened their magnitude in implementing risk and keeping regulatory capital for both internal and external purposes. This explains the new paradigm in the banking system. Various banks are hiring professionals who have expertise in risk or who are certified FRMs( Financial Risk Managers) by  GARP ( Global Association of Risk Management). Recently, SBI has started the practice of recruiting specialist cadre officers in management on the basis of interview alone.

Impact of Advance Global Courses like Financial Risk Managers & CFA in banking system:

  1. Banking systems of most countries are globally in positive correlation with each other, and due to this, there will be a standardization of process. Economies like India will begin following global standards in risk & finance.
  2. Global acceptance of FRM and CFA curriculums is bound to positively increase people’s sentiments and trust in the global financial system. There will be fewer frauds.
  3. In the coming future, there will be a job shift. FRM and CFA candidates will be cherry picked over other students where sector specific risk jobs are concerned.
  4. New avenues will give rise to amalgamation of finance with technology (Artificial Intelligence) very soon.


Scope in India

Indian economy is the sixth largest economy in the world. It is also one of the fastest growing economies in the world. The future managers of India have immense scope in market risk, credit risk, liquidity risk, operational risk, legal and regulatory risk, business risk, strategic risk, and reputation risk.