CAIIB Risk Management Syllabus 2025, Check Detailed Syllabus and Pattern

CAIIB Risk Management Syllabus 2025

The CAIIB Risk Management paper is for banking professionals who want to strengthen their understanding of various risks in the banking sector and learn effective ways to manage them. This syllabus covers key areas such as credit risk, market risk, operational risk, and liquidity risk, along with regulatory guidelines and risk mitigation strategies.

By studying this paper, candidates can enhance their decision-making skills, improve risk assessment capabilities, and contribute to safer and more efficient banking operations. It is ideal for those looking to develop expertise in risk management and advance their career in the banking industry. In this blog, we have provided all the details related to the CAIIB Elective Paper 4 Risk Management module wise syllabus, and exam pattern.

CAIIB Elective Paper 4 Risk Management Syllabus

As per the IIBF, the CAIIB exam syllabus consists of 4 compulsory papers and one elective paper, which professionals can select according to their choice. There are a total of 5 elective papers, among which Elective Paper 4 is Risk Management.

IIBF CAIIB Elective Paper Risk Management Exam Pattern

The CAIIB elective paper 4 consists of 100 questions, for a total of 100 marks, with no negative marking for incorrect answers, or answers that were not being attempted. The details CAIIB exam pattern are as follows:

Subject	No. of Questions	Total Marks	Duration
Elective Paper 4 Risk Management	100	100	2 hours

Also: Check out the detailed CAIIB Syllabus 2025

CAIIB Elective Paper Risk Management Syllabus Details

The CAIIB Paper 4 elective paper, Risk Management syllabus consists of 7 modules, from which 100 questions are asked. The module-wise details are as follows:

1. Module A: Risk and Risk Management Framework
2. Module B: Credit Risk
3. Module C: Market Risk
4. Module D: Operational Risk
5. Module E: Basel and RBI Guidelines on Risk Management
6. Module F: Derivatives and Risk Management
7. Appendix: Statistical Concepts

CAIIB Elective Paper 4 Risk Management Syllabus Module A

The details of the CAIIB elective paper 4 Module A Risk and Risk Management Framework syllabus are as follows:

Topic	Details
Why Banks are Special	– Functions banks perform – Bank’s role in the economy – Other uniqueness of banks
Risks and Risk Management in Banks	– What is Risk? – Definition of Risk – Risk in Banks – Business Risk vs Control Risk – Financial Risk vs Non-Financial Risk – Interconnectedness among banking risks – Recent developments in risk management – Banking reforms in India – New trends in Indian banking system – Risk management going ahead – Various types of risks faced by a bank – Non-financial risks
Risk Management Framework	– Lessons from crisis – Benefits of risk management – Risk management concept and approach – Risk culture – Risk management architecture – Elements of risk management framework – Organizational structure – Risk management policy – Risk appetite – Risk limits – Risk identification process – Risk measurement – Risk mitigation – Risk monitoring and control – Management information system (MIS) – Enterprise risk management (ERM) – Events – risk and opportunity – Components and effectiveness of ERM – Relationship with internal control
Asset Liability Management and Interest Rate Risk in Banking Book	– What is ALM? – Objectives of ALM – ALM process – Interest rate risk – Duration GAP analysis – Measurement system reports – Stress testing – Back testing – Interest rate risk mitigation
Liquidity Risk Management	– What is liquidity? – Liquidity vs solvency – Forms of liquidity risk – Liquidity management – Factors contributing to liquidity risk – Liquidity risk and balance sheet – Risk management framework for liquidity risk – Identification and measurement of liquidity risk

CAIIB Elective Paper 4 Risk Management Syllabus Module B

The details of the CAIIB elective paper 4 Module B Credit Risk syllabus are as follows:

Topic	Subtopics
Credit Risk Management Framework	– What is credit risk? – Obligor/Borrower level vs portfolio risk – Systematic vs unsystematic risk – Need for credit risk management framework – Credit risk culture – Building blocks of credit risk management – Strategy and financial goals – Risk appetite – Portfolio risk and reward – Loan policy – Due diligence process – Loan approval process – Limits on aggregate loans and commitments – Underwriting criteria – Exceptions to credit policy – Organization structure
Obligor/Borrower Risk	– Business/Operating risk – Financial risk – Interaction between business and financial risk – Different risk levels – Sources of external risk – Industry risk analysis – Entity level risk
Credit Rating System	– What is credit rating? – Usefulness for banks – Features of internal credit rating system – Rating exercise and assignment – Rating by external agencies
Portfolio Credit Risk	– Systematic risk – Unsystematic/idiosyncratic/diversifiable risk – Concentration risk – Correlation risks
Credit Risk Models	– Uses of credit models – Types of models
Measurement of Credit Risk	– Probability of Default (PD) & estimation methods – Exposure at Default (EAD) – Loss Given Default (LGD) – Portfolio assessment of credit risk – Risk Adjusted Return on Capital (RAROC) – Economic capital application in RAROC – Risk-based pricing methods
Credit Derivatives	– What is a credit derivative? – Protection buyer and seller – Advantages to buyer and seller – Credit events & payout – Credit default swap (CDS) – Total return swap (TRS) – Credit options – Credit-linked notes

CAIIB Elective Paper 4 Risk Management Syllabus Module C

The details of the CAIIB elective paper 4 Module C Market Risk syllabus are as follows:

Topic	Details
Market Risk	– What is market risk? – Trading portfolio in a bank – Interest rate risk, equity price risk, FX risk, commodity price risk – Liquidity, credit, and counterparty risk – Model risk – Market risk management framework – Organizational structure for market and trading risk – Risk management strategy, policies, and procedures
Fixed Income Securities	– What is a bond? – Government of India in bond market – Bond market in India – Bond valuation
Measurement of Interest Rate Risk	– Sensitivity approach – Price value of a basis point (PVBP) – Portfolio PVBP computation – Hedging using PVBP – Duration: definition, properties, modified duration, price elasticity – Convexity – Bond portfolio management
Value at Risk (VaR)	– Historical background – Definition and assumptions – Building blocks and methodologies – Comparison of methodologies – Limitations of VaR – Extreme value theory – Stress testing and backtesting of VaR models

CAIIB Elective Paper 4 Risk Management Syllabus Module D

The details of the CAIIB elective paper 4 Module D Operational Risk syllabus are as follows:

Topic	Details
Operational Risk and Framework	– Developments leading to operational risk – Peculiarity of operational risk – Definition – Operational risk culture – Organizational framework – Policy guidelines & strategic approach – Risk identification and assessment – Collection of internal & external loss data
RCSA & Key Risk Indicator (KRI)	– RCSA process – Defining inherent risk – Study of effectiveness of control – Computation of risk zone – Color-coded risk levels – KRI selection and uses – Scenario analysis – Risk appetite
Technology Risk	– Principles of information security – Governance, roles & responsibilities – Critical components – Malware security, patch management, change management – Audit trails, reporting, network security, remote access – DDoS attacks – ISO 27001 implementation – Wireless security – Business continuity considerations – Electronic banking & cyber frauds – Emerging technologies
Corporate Governance	– Definition & banking perspective – Basel Committee & governance – Importance in risk management – Benchmarking risk governance
Climate Risk & Sustainable Finance	– Climate situation in India – Basel Committee guidelines – Characteristics of climate risk – Financial risks from climate change – Climate risk management framework – Green finance for sustainable development

CAIIB Elective Paper 4 Risk Management Syllabus Module E

The details of the CAIIB elective paper 4 Module E Basel and RBI Guidelines on Risk Management syllabus are as follows:

Topic	Details
Need for Regulation	– Why banks need regulation – Banking regulation & supervision in India – Global banking regulation – Basel Committee on Banking Supervision – Basel I & II accords
Global Financial Crisis & Basel III	– Regulatory shortcomings & reforms – Basel III response to global crisis
Regulatory Capital & Capital Adequacy	– Bank capital & accounting – Minimum capital requirements – Basel III capital regulation – Standardized approach for credit risk & off-balance sheet items – Internal rating-based approach
Capital Allocation Against Market Risk	– Scope & coverage of capital charge – Measurement for interest rate risk
Capital Charge for Operational Risk	– Definition, measurement methodologies – Basic, standardized, advanced approaches – Business indicators & risk-weighted assets
Supervisory Review & ICAAP	– Pillar 2 objectives – ICAAP principles & coverage – Risk appetite & structure – Risk identification, measurement, monitoring, reporting – Internal control & board reporting – Stress tests & scenario analysis
Stress Testing	– ICAAP stress testing framework – Sensitivity, scenario & reverse stress tests – Single factor stress tests – PCA framework for banks
Market Discipline & Basel III Buffers	– Disclosure principles – Capital conservation buffer – Counter-cyclical buffer – Domestic systemically important banks – Leverage ratio, liquidity standards, NSFR
Risk-Based Supervision & Audit	– RBI initiatives – Supervisory process & approach – Risk-based internal audit, objectives, audit policy, functional independence, risk profiling

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CAIIB Elective Paper 4 Risk Management Syllabus Module F

The details of the CAIIB elective paper 4 Module F Derivatives and Risk Mangement syllabus are as follows:

Topic	Details
Derivatives Overview	– What is a derivative? – Features – OTC vs exchange-traded derivatives – Uses & misuse – Major types – Long & short positions – Derivative markets in India
Forward Contract	– Definition & characteristics – Advantages & problems – Pay-off – Pricing & valuation – Forward rate agreement
Futures	– Definition & difference from forwards – Performance & clearing – Margin account – Spot-future relationship – Delivery & cash settlement – Pricing, contango & backwardation – Interest rate futures
Options	– Definition & terminology – Call & put options – Pricing methods – Interest rate options
SWAP	– Definition, characteristics, terminology – Types of swap, interest rate swap – Calculating cash flows – Uses of interest rate swap – Swaptions

CAIIB Elective Paper 4 Risk Management Syllabus Module G

The details of the CAIIB Elective Paper 4, Module G, termed as Appendix: Statistical Concepts syllabus, are as follows:

Topic	Details
Statistical Measures	– Frequency distribution – Measures of central tendency & dispersion – Skewness & kurtosis – Correlation & regression – Expected return & average ratios – Risk & portfolio diversification – Beta & performance evaluation
Probability Theory	– Probability & conditional probability – Random variable & distribution function – Expectation & standard deviation – Binomial, Poisson, Normal distributions – Credit risk, VaR, option valuation

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