The PRMIA Operational Risk Manager (ORM) Exam (8010) validates your ability to identify, measure, and mitigate operational risks across financial institutions. This exam is designed for risk professionals, compliance officers, and operational managers who need to demonstrate competency in Operational Risk Management. This page provides a clear roadmap of exam topics, question formats, and practical preparation strategies to help you succeed on test day.
Use this topic map to guide your study for PRMIA 8010 (Operational Risk Manager (ORM) Exam) within the Operational Risk Management path.
The 8010 exam combines multiple-choice items and scenario-based questions to assess both foundational knowledge and applied judgment in operational risk contexts.
Questions progress in difficulty and reward candidates who can connect theory to practical decision-making in live trading, risk, and operations environments.
An efficient study plan allocates time proportionally to topic weight and integrates practice questions early and often. Most candidates benefit from a structured 6-8 week timeline, with weekly focus areas and regular progress checks.
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Credit Valuation Adjustment (CVA), Managing Counterparty Risk and CVA, and Risk Mitigation typically account for 40-50% of exam items, reflecting their importance in modern operational risk management. However, foundational topics like Classic Credit Products and Credit Risk Methodology are tested frequently in scenario questions, so balanced preparation across all domains is essential.
In practice, you originate a credit product (e.g., a loan or derivative), monitor it through its life cycle (origination, monitoring, default), and apply risk methodology to quantify losses at each stage. Operational risk surfaces when controls fail at any point, a missed payment, a model error, or a settlement delay. Understanding these connections helps you spot where controls matter most.
Many candidates confuse CVA calculation methods or misunderstand how collateral and netting reduce operational exposure. Others overlook the regulatory and governance aspects of counterparty risk management, focusing only on quantitative models. Reading scenario questions carefully and considering both technical correctness and practical feasibility of solutions improves accuracy.
Direct experience in trading, risk, or operations is valuable but not required; the exam tests conceptual mastery and judgment, not system-specific knowledge. If you lack hands-on exposure, prioritize scenario-based practice questions and real-world case studies to build intuition for how operational failures cascade through credit and counterparty workflows.
In the final week, take one full-length timed practice test to identify remaining weak spots, then focus review time on those areas rather than re-reading all topics. Practice high-difficulty scenario questions daily, and ensure you can explain the "why" behind each answer. On the day before the exam, do a light review of key definitions and formulas, then rest well.
For a corporate bond, which of the following statements is true:
1. The credit spread is equal to the default rate times the recovery rate
2. The spread widens when the ratings of the corporate experience an upgrade
3. Both recovery rates and probabilities of default are related to the business cycle and move in opposite directions to each other
4. Corporate bond spreads are affected by both the risk of default and the liquidity of the particular issue
The credit spread is equal to the default rate times the loss given default, or stated another way, default rate times (1 - recovery rate). It is not equal to the default rate times the recovery rate. Therefore statement I is not correct.
When ratings are upgraded by rating agencies, the spread contracts and not widen. Therefore statement II is not correct.
Both recovery rates and probabilities of default are related to the business cycle, and they move in opposite directions. Economic recessions witness an increase in the default rate and a decrease in the recovery rate, and economic expansions result in a decrease in the default rate and an increase in the recovery rates when default does happen. Therefore statement III is correct.
Bond spreads incorporate both the risk of default, but also considerations of liquidity in the case of corporate bonds. Hence statement IV is correct.
If the odds of default are 1:5, what is the probability of default?
Odds are the ratio between the probability of the occurence of an event to the probability that the event does not occur.
If odds are H, then p = H/(1 + H) and H = p/(1-p). In this case the odds are 1:5, or 1/5, therefore the correct answer is Choice 'a', equal to (1/5)/(1 + 1/5) = 1/6 = 16.67%. All other choices are incorrect.
Which of the following is a cause of model risk in risk management?
Model risk is the risk that a model built for estimating a variable will produce erroneous estimates. Model risk is caused by a number of factors, including:
a) Misspecifying the model: For example, using a normal distribution when it is not justified.
b) Model misuse: For example, using a model built to estimate bond prices to estimate equity prices
c) Parameter estimation errors: In particular, parameters that are subjectively determined can be subject to significant parameter estimation errors
d) Programming errors: Errors in coding the model as part of computer implementation may not be detected by end users
e) Data errors: Errors in data used for building the model may also introduce model risk
Therefore the correct answer is d, as all the choices are a source of model risk.
Which of the following best describes the concept of marginal VaR of an asset in a portfolio:
The correct answer is choice 'd'
Marginal VaR is just the change in total VaR from a $1 change in the value of the asset in the portfolio. All other answers are incorrect. Mathematically, it is expressed as follows, where VaRp is the VaR for the portfolio, and Vi is the value of the asset in question.
Other answers describe other VaR related concepts such as incremental VaR, Component VaR and Conditional VaR.
According to Basel II's definition of operational loss event types, losses due to acts by third parties intended to defraud, misappropriate property or circumvent the law are classified as:
Choice 'c' is the correct answer. Refer to the detailed loss event type classification under Basel II (see Annex 9 of the accord). You should know the exact names of all loss event types, and examples of each.
