Business, Legal & Accounting Glossary

Definition: GARP

Full Definition of GARP

The Global Association of Risk Professionals (GARP) is a web-based organization that claims to represent the financial risk management community. In non-profit circles, GARP might be euphemistically called a for-profit-not-for-profit. Through its official-looking website and numerous spam e-mails, it peddles a host of products and services—conferences, DVD’s, a certification, training, employment services, digital downloads, etc. People wonder whose pockets all the money ends up in.

GARP has been rocked by scandal, but the website stayed up through it all, and the spam e-mails were only briefly interrupted. They target newcomers to the risk management field. People who are unaware of the organization’s checkered past can easily spend $1,000 on GARP’s dubious products before learning the truth.

GARP was launched by a pair of risk managers, Marc Lore and Lev Borodovsky, in 1996. A few months later, their fledgeling initiative was described in the December issue of Derivatives Strategy magazine (now defunct)

There is a new GARP on the block, one not born of the famous John Irving novel. This one is a grassroots organization of risk managers with the full name of Global Association of Risk Professionals. GARP is the brainchild of two individuals at dealer firms, Marc Lore and Lev Borodovsky, who with some colleagues used to meet weekly at a New York pub to talk shop—recruitment, systems, etc. Four months ago they decided to give themselves a formal name and organization that was launched on the Internet ( By early November, after a few thousand hits, GARP boasted more than 250 signed-on members from 23 countries. “It took off way beyond our wildest expectations,” says Borodovsky …

The Internet was taking off in 1996. Millions of people were discovering browsers and hyperlinked webpages for the first time. Some were risk professionals, and GARP’s website was one of the few websites devoted to risk management at the time. Anyone who entered their contact information on the website was deemed a member, so membership rapidly grew.

Volunteers stepped forward to be regional directors, establishing local chapters around the globe. These provided grassroots programs for local members, including meetings where people could listen to speakers and network.

GARP had little need for money. Other than the website, there wasn’t much overhead, and work was performed by volunteers. Lore and Borodovsky raised money by selling corporate memberships, which allowed vendors to be listed as “recommended vendors” on the GARP website. They sold books on the website through Amazon’s associate’s program and other channels. They also sold banner advertising on their website.

In 1997, Lore and Borodovsky launched a “professional certification” called Financial Risk Manager (FRM certification). Candidates would earn the FRM certification by paying a $175 fee and passing a GARP-sponsored exam. The exam was offered in seven locations around the world, and volunteers in the local chapters did much of the work. There were 130 candidates that first year, earning GARP $22,750. In subsequent years, the registration fee grew, as did the number of candidates.

The FRM certification may have been GARP’s first significant money-maker, but there were others. GARP was soon running lavish conferences in financial centres. They launched a glossy magazine Risk Professional. They got into book publishing, asking volunteers to write content. There were also plans for a multi-tiered membership structure. Anyone who had entered contact details on the GARP website would still be a member, but people who had passed the FRM exam would have a higher level of membership, requiring annual membership dues.

By 2000, GARP was generating significant revenues, and there remained little overhead or expenses other than those associated with the money-making ventures themselves. Except for programs run by volunteers at the local chapters, almost everything GARP did seemed to be about making money.

At this point, Lore and Borodovsky filed paperwork to shut down the non-profit GARP and replace it with a new for-profit corporation with the same name. They had previously formed a for-profit corporation called Management Risks Process to which they had funnelled GARP’s conference business. Now they merged that firm with the new for-profit GARP and, allegedly, pressed to be bought out—Borodovsky asking for $4.5 million; Lore wanting $7 million.[1]

All this happened out of public view, at the highest levels of GARP. Nothing was announced on the website, in Risk Professional magazine or in the monthly newsletter e-mailed to members. The only external sign of change was the disappearance of the phrase “not-for-profit” from a paragraph describing GARP on the organization’s website. Regional directors and other volunteers continued to contribute their time, not realizing they were now working for a profit-seeking corporation.

But too many insiders knew what was going on. Rumours started to leak, and e-mails passed between concerned members. One lengthy e-mail circulated, documenting GARP’s money-making activities and asking where the money was going [read that e-mail]. When members of the media received copies, a scandal broke.

Over the next several months, Lore and Borodovsky engaged in damage control, as a drip-drip-drip of revelations flowed from trade magazines. GARP’s recently-hired CEO resigned to be replaced by the chief operating officer. Within six months, she too resigned. GARP’s advisory board headed for the doors, as did a procession of regional directors.

In October 2001, it was announced that Lore and Borodovsky would leave GARP and a “blue-ribbon panel” would oversee the organization’s return to non-profit status. Little came of this, as negotiations with Lore and Borodovsky dragged on. In January 2002, a group of frustrated regional directors abandoned the negotiations and launched a new non-profit called the Professional Risk Managers’ International Association (PRMIA) as an alternative to GARP. The inaugural issue of their own newsletter gave the risk management community a final insiders’ glimpse of the direction GARP was heading:

All of the founding Regional Directors of PRMIA are former Regional Directors for GARP. You are probably aware of the many months that we spent trying to recover the nonprofit status under which GARP was founded and operated until late 2000. Our goal was always to keep that association alive, but only if saving it meant no compromises of our professional integrity. Many of us may still be on the GARP mailing list. If so, you probably received an e-mail from GARP announcing preliminary plans for a group of investors and others to take financial and managerial control of GARP and related companies from founders Marc Lore and Lev Borodovsky. We feel that it is important for you to know that approximately two weeks ago, representatives of this group approached the Regional Directors of PRMIA about their intent. Since these plans included the continuation of a significant for-profit element at GARP, our Regional Directors and Interim Board discussed and very quickly rejected them as being inconsistent with the values that we promoted as volunteers at GARP and in our volunteer efforts at PRMIA …

Some people who abandoned GARP chose not to join PRMIA. That organization adopted a disturbingly similar business model to that of GARP, eventually offering its own Professional Risk Manager certification (PRM certification), courting sponsorships, running training programs and offering employment services.

GARP emerged from its negotiations with Lore and Borodovsky. Their names were expunged from the website, as was any mention of the scandal. The site is still up and running, drawing in people who might be interested in becoming risk managers. It still offers free membership for those who provide their contact details. Those who do are soon receiving offers for GARP’s FRM certification, conferences, training, downloads and more. As of 2007, there were apparently 71,000 individuals receiving GARP’s advertising—that being the number of “members” GARP claimed on the website.

The GARP scandal unfolded in 2001-2002, just as the world was struggling with the terrorist attacks of September 11, the implosion of the stock market bubble, and corporate scandals, including Enron and Worldcom. For risk managers, it was an embarrassment. They were supposed to be experts at rooting out fraud and abuse, yet they had volunteered their time and spent money on GARP, oblivious to the lack of safeguards or controls. Today, any comment that the risk management community should form a non-profit to represent the profession’s interests is likely to be met with a derisive comment that “the last thing we need is another non-profit.”

The risk management profession is always looking for new quantitative professionals. If you have good grades in a quantitative undergraduate program and a confident interviewing style, you can land a job. Employers train new hires in the finance and risk management skills they need to know. That is how most professions work. Still, a few individuals contemplating a career in risk management continue to be diverted into the GARP certification, costing them money and postponing their careers by as much as a year.

Synonyms For GARP

Global Association of Risk Professionals

Cite Term

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Page URL
Modern Language Association (MLA):
GARP. Payroll & Accounting Heaven Ltd. September 20, 2021
Chicago Manual of Style (CMS):
GARP. Payroll & Accounting Heaven Ltd. (accessed: September 20, 2021).
American Psychological Association (APA):
GARP. Retrieved September 20, 2021, from website:

Definition Sources

Definitions for GARP are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 16th April, 2020 | 17 Views.