FRM-P2-2026Advanced

FRM Part II exam guide

The second and final FRM exam: applying risk measurement and management to real portfolios, balance sheets and current market issues.

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What is the FRM Part II exam?

FRM Part II builds on the tools from Part I and asks how they are used in practice. The exam covers market risk, credit risk, operational risk and resilience, liquidity and treasury risk, and risk management for investment portfolios, plus a topic on current issues that changes every year with GARP's chosen readings.

Compared with Part I, questions are longer, more scenario-based and more likely to test judgement about which approach is appropriate rather than the arithmetic of applying it. There is still plenty to calculate, particularly in market and credit risk, but the reading load is much heavier: the 2026 syllabus runs to more than a hundred readings.

Passing Part II, together with two years of full-time risk-related work experience, completes the FRM certification.

Who sits it

  • Candidates who have passed FRM Part I
  • Risk managers moving from analyst work into model validation, portfolio risk or treasury roles
  • Professionals in regulatory, capital and liquidity functions who need Basel-era fluency

Exam format at a glance

Questions
80 multiple-choice
Duration
4 hours
Delivery
Computer-based at Pearson VUE test centres
Exam windows
May, August and November
Fees (USD)
Exam registration from about $600 (early) to $800 (standard); the enrollment fee was paid with Part I
Prerequisite
A pass in FRM Part I within the previous four years
Recent pass rate
50% (November 2025 sitting, the latest GARP has published)
Recommended study
GARP suggests around 240 hours

Exam-body facts last checked September 2026. Fees, dates and formats change; confirm the current details with Global Association of Risk Professionals (GARP) before registering.

FRM Part II pass rates by sitting

SittingPass rate
November 202550%
November 202452%
August 202452%
May 202452%
November 202353%
May and August 202351%
November 202259%
May and August 202257%
November 202163%
May 202159%

GARP reports a single figure when two windows are graded together. Figures up to August 2023 and for November 2025 come from GARP's own published results; the 2023 and 2024 rows in between are as reported by exam-prep publishers, because GARP has not kept its historical table up to date. GARP has not published rates for the 2025 May and August sittings or for any 2026 sitting.

Syllabus and topic weights

  • 1.Market Risk Measurement and Management20% · 61 lessons · 914 questions · 298 cards
    1. Estimating Market Risk Measures: An Introduction and Overview
    2. Non-Parametric Approaches
    3. Parametric Approaches (II): Extreme Value
    4. Backtesting VaR
    5. VaR Mapping
    6. Validating Bank Holding Companies' Value-at-Risk Models for Market Risk
    7. Beyond Exceedance-Based Backtesting of Value-at-Risk Models: Methods for Backtesting the Entire Forecasting Distribution
    8. Correlation Basics: Definitions, Applications, and Terminology
    9. Empirical Properties of Correlation: How Do Correlations Behave in the Real World?
    10. Financial Correlation Modeling — Bottom-Up Approaches
    11. Regression Hedging and Principal Component Analysis
    12. Arbitrage Pricing with Term Structure Models
    13. Expectations, Risk Premium, Convexity, and the Shape of the Term Structure
    14. The Art of Term Structure Models: Drift
    15. The Art of Term Structure Models: Volatility and Distribution
    16. The Vasicek and Gauss+ Models
    17. Volatility Smiles and Volatility Surfaces
    18. Fundamental Review of the Trading Book
  • 2.Credit Risk Measurement and Management20% · 97 lessons · 1,360 questions · 427 cards
    1. Fundamentals of Credit Risk
    2. Governance
    3. Credit Risk Management
    4. Capital Structure in Banks
    5. Introduction to Credit Risk Modeling and Assessment
    6. Credit Scoring and Rating
    7. Credit Scoring and Retail Credit Risk Management
    8. Country Risk: Determinants, Measures, and Implications
    9. Estimating Default Probabilities
    10. Credit Value at Risk
    11. Portfolio Credit Risk
    12. Credit Risk
    13. Credit Derivatives
    14. Derivatives
    15. Counterparty Risk and Beyond
    16. Netting, Close-out and Related Aspects
    17. Margin (Collateral) and Settlement
    18. Central Clearing
    19. Future Value and Exposure
    20. Credit Value Adjustment (CVA)
    21. The Evolution of Stress Testing Counterparty Exposures
    22. Structured Credit Risk
    23. An Introduction to Securitisation
  • 3.Operational Risk and Resilience20% · 89 lessons · 534 questions · 398 cards
    1. Introduction to Operational Risk and Resilience
    2. Risk Governance
    3. Risk Identification
    4. Risk Measurement and Assessment
    5. Risk Mitigation
    6. Risk Reporting
    7. Integrated Risk Management
    8. Cyber-resilience: Range of Practices
    9. Case Study: Cyberthreats and Information Security Risks
    10. Sound Management of Risks Related to Money Laundering and Financing of Terrorism
    11. Case Study: Financial Crime and Fraud
    12. Guidance on Managing Outsourcing Risk
    13. Case Study: Third-Party Risk Management
    14. Case Study: Investor Protection and Compliance Risks in Investment Activities
    15. Supervisory Guidance on Model Risk Management
    16. Case Study: Model Risk and Model Validation
    17. Stress Testing Banks
    18. Risk Capital Attribution and Risk-Adjusted Performance Measurement
    19. Range of Practices and Issues in Economic Capital Frameworks
    20. Capital Planning at Large Bank Holding Companies
    21. Capital Regulation Before the Global Financial Crisis
    22. Solvency, Liquidity, and Other Regulation After the Global Financial Crisis
    23. High-Level Summary of Basel III Reforms
    24. Basel III: Finalising Post-Crisis Reforms
  • 4.Liquidity and Treasury Risk Measurement and Management15% · 60 lessons · 652 questions · 268 cards
    1. Liquidity Risk
    2. Liquidity and Leverage
    3. Early Warning Indicators
    4. The Investment Function in Financial-Services Management
    5. Liquidity and Reserves Management: Strategies and Policies
    6. Intraday Liquidity Risk Management
    7. Monitoring Liquidity
    8. The Failure Mechanics of Dealer Banks
    9. Liquidity Stress Testing
    10. Liquidity Risk Reporting and Stress Testing
    11. Contingency Funding Planning
    12. Managing Non-Deposit Liabilities
    13. Repurchase Agreements and Financing
    14. Liquidity Transfer Pricing: A Guide to Better Practice
    15. The US Dollar Shortage in Global Banking and the International Policy Response
    16. Covered Interest Parity Lost: Understanding the Cross-Currency Basis
    17. Risk Management for Changing Interest Rates: Asset-Liability Management and Duration Techniques
  • 5.Risk Management and Investment Management15% · 85 lessons · 957 questions · 300 cards
    1. Factor Theory
    2. Factors
    3. Alpha (and the Low-Risk Anomaly)
    4. Portfolio Construction
    5. Portfolio Risk: Analytical Methods
    6. VaR and Risk Budgeting in Investment Management
    7. Portfolio Performance Evaluation
    8. Hedge Fund Investment Strategies
    9. Risk, Regulation and Organizational Structure
    10. The Rise and Risks of Private Credit
    11. Private Markets Investing
    12. Performing Due Diligence on Specific Managers and Funds
    13. Distress Symptoms and Remedies
    14. Madoff: A Riot of Red Flags
    15. Market-Driven Scenarios: An Approach for Plausible Scenario Construction
    16. Liquidity Risk Management
    17. Illiquid Assets
  • 6.Current Issues in Financial Markets10% · 33 lessons · 179 questions · 160 cards
    1. Advances in Artificial Intelligence: Implications for Capital Markets Activities
    2. The Financial Stability Implications of Artificial Intelligence
    3. The Global Drivers of Private Credit
    4. Geopolitical Risks: Implications for Asset Prices and Financial Stability
    5. Monetary and Fiscal Policy: Safeguarding Stability and Trust
    6. Regulating the Crypto Ecosystem: The Case of Unbacked Crypto Assets
    7. Tokenization and Financial Market Inefficiencies
    8. Digital Resilience and Financial Stability

Lesson, question and flashcard counts are StudyOptima's published content for each topic. Expand a topic to see its subtopics.

How to prepare for FRM Part II

  1. 1

    Plan around the reading load, not the topic weights. Operational Risk and Resilience is 20% of the exam but by far the longest section to read, and it is mostly qualitative, so it rewards early, steady coverage rather than a last-minute push.

  2. 2

    Market Risk and Credit Risk carry most of the calculations: VaR methods, backtesting, term-structure models, credit spreads, counterparty exposure and securitisation. Work these until you can do them without notes.

  3. 3

    Liquidity and Treasury Risk is comparatively new and heavily Basel-flavoured (LCR, NSFR, funds transfer pricing). Candidates who skim it lose easy marks.

  4. 4

    Read the Current Issues papers themselves, not just summaries. Questions often turn on a specific argument or finding in the paper.

  5. 5

    In the final month, sit full 80-question timed mocks. Four hours for 80 questions sounds generous until you meet a page-long scenario.

Study for FRM Part II on StudyOptima

425 study lessons

Condensed notes for every topic, organised by learning objective, with read-progress tracking.

6,020 practice questions

Exam-style questions with worked explanations, timed mocks, and re-drills of what you got wrong.

1,851 flashcards

Spaced-repetition review of the definitions and formulas the exam keeps coming back to.

Free lessons to start with

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FRM Part II FAQ

How different is Part II from Part I?

Less maths per question, far more reading, and more emphasis on choosing the right approach. Candidates who passed Part I on calculation speed alone often find Part II needs a different study style.

What counts as the two years of work experience?

Full-time professional work in financial risk management or a related field such as trading, portfolio management, audit, or academic research. GARP reviews a short written description when you submit it.

Does the syllabus change every year?

Yes. GARP updates readings annually and replaces the Current Issues papers entirely. Our FRM Part II content is aligned to the 2026 learning objectives.

Can I buy FRM Part I and Part II together?

Yes. StudyOptima offers a combined Part 1 + 2 plan at a discount to buying each separately.

Related exams

FRM Part I

The first of two exams for the Financial Risk Manager designation: the quantitative and market foundations every risk professional is expected to know.

CFA Level II

The second CFA exam: asset valuation in depth, tested through vignette-based item sets rather than standalone questions.

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