Wondering what the FRM certification all about?
If you’re keen on a career in risk management, consider the FRM exams by the Global Association of Risk Professionals (GARP): a two-part, self study set of examinations with global recognition.
This comprehensive guide is packed with the latest information that will aid your decision making on this qualification. Let’s take a look!
- What is a Financial Risk Manager (FRM)?
- Overview of FRM Certification
- What is FRM exam & qualification?
- FRM pass rates since 2010
- FRM exam topics & weightings
- FRM fees & certification cost
- FRM exam dates and registration deadlines
- What are the FRM exam requirements?
- Benefits of FRM certification
- FRM vs CFA – Which is right for you?
- FRM exam FAQs
What is a Financial Risk Manager (FRM)?
FRM stands for Financial Risk Manager, and is a professional certification offered by the Global Association of Risk Professionals (GARP).
The FRM qualification is considered to be the leading professional certification for those working in the financial risk management sector. To achieve FRM certification, candidates are required to pass two exams and must also be able to demonstrate that they have at least two years of relevant work experience or employment history.
Financial Risk Managers are employed in a range of organizations across the financial sector including banks, investment and asset management companies, insurance providers and accounting firms.
Passing the FRM exam and achieving certified FRM status means an individual has demonstrated that they possess the knowledge, skills and experience that meet the latest standards in financial risk management. Qualified FRM professionals are in demand across the financial sector, and career prospects for financial risk managers are expected to grow at above average levels over the next decade.
Overview of FRM Certification
Since the inception of FRM program in 1997, more than 70,343 certified Financial Risk Managers have successfully obtained the designation.
They are employed internationally at nearly every major bank, asset management firms, hedge funds, consulting firms, and regulators.
There is fast-growing demand for the Financial Risk Manager certification.
FRM exam registrations have grown by an average of 13% per year since 2010, registering a growth of 20% in 2017-2018 alone. The 2020 figures were impacted by the pandemic, and are expected to recover.
What is FRM exam & qualification?
The FRM exam is a two-part computer-based examination consisting of a 4 hour multiple choice exam each. Its difficulty is equivalent to a Master’s degree, according to benchmarking done by UK ENIC (European Network of Information Centre of the United Kingdom).
There are 3 exam windows for Part 1 (May, August and November), and 2 exam windows for Part 2 (May and November) annually.
Candidates can still take both Parts on the same day, but you will need to pass Part 1 before Part 2 is scored.
The exams are conducted exclusively in English, in person at 100+ exam sites around the world. You can find out your nearest exam center here.
In terms of pass criteria, there are no negative markings for incorrect answers. The passing score is determined by the exam committee each year.
The exam results are sent to candidates via email approximately 8 weeks after the conduct of exam, and result is a simple pass or fail.
However, you will be provided with quartile results so that you can see how you scored on specific areas relative to other candidates.
FRM pass rates since 2010
The latest November 2021 exam recorded pass rates of 45% (Part 1) and 63% (Part 2).
Check out our FRM pass rates article for more details and a gauge of difficulty of the exams.
FRM exam topics & weightings
FRM part 1 topics
The Part 1 curriculum covers the tools used to assess financial risk. The topics and percentages are as below:
|Part 1 Topic Areas||Topic Weight|
|Foundations of Risk Management (FRM)||20%|
|Quantitative Analysis (QA)||20%|
|Financial Markets & Products (FMP)||30%|
|Valuation & Risk Models (VRM)||30%|
FRM part 2 topics
The Part 2 curriculum highlights on the application of the tools studied in Part 1 with a deeper understanding of risk types and risk management. Topics and percentages are in the table below:
|Part 2 Topic Areas||Topic Weight|
|Market Risk Measurement & Management (MR)||20%|
|Credit Risk Measurement & Management (CR) ||20%|
|Operation Risk & Resiliency (ORR)||20%|
|Liquidity and Treasury Risk Measurement and Management (LTR)||15%|
|Risk Management and Investment Management (IM)||15%|
|Current Issues in Financial Markets (CI)||10%|
FRM fees & certification cost
There is a recent increase in FRM exam fees due to the transition to computer-based exams. Here are the latest costs:
|Fees in USD ($)||Part 1||Part 2|
There is a one-off enrollment fee of $400 that applies to first time candidates. For example, if you’re retaking Part 1 exams, the exam fee varies between $600-$800 only depending on your registration date.
The fees for Part 2 candidates are the same as Part 1 (excluding the one-off enrollment fee), ranging from $600-$800 depending on registration date.
That said, registration fees are only one part of the costs of Financial Risk Manager exams. Check out our FRM fees summary for a more thorough estimate of total cost, including FRM courses.
FRM exam dates and registration deadlines
For the latest exam registration dates and deadlines, check out our FRM exam dates summary.
What are the FRM exam requirements?
In order to be certified as a Financial Risk Manager and be able to use the FRM designation after your name, the following conditions must be fulfilled:
- Pass FRM Part 1;
- Pass FRM Part 2 within 4 years of passing Part 1; and
- Demonstrate 2 years of professional full-time financial risk management work experience.
FRM work experience requirements:
- To demonstrate relevant work experience, GARP requires a candidate submission of a minimum of 4-5 sentences (at least 300 words) detailing how he/she manages financial risk in their day-to-day work.
- Experience completed for school will not be considered, including internships, part-time jobs, or student teaching.
- The work experience submitted cannot be more than 10 years prior to having passed the Part 2 exam.
There are time limits to getting certified as a Financial Risk Manager:
- Once a candidate passes Part 1, he/she must then pass the Part 2 within 4 years.
- Then, the candidate will have 5 years from the date of passing Part 2 exams to obtain work experience verification. If this is not done in time, the candidate will have to re-enroll and pass both Part 1 and Part 2 exams again for certification, not to mention re-paying the required fees to do so.
Benefits of FRM certification
Financial Risk Managers are one of the most widely accepted global designation for risk management profession, and getting this certification certainly sets you apart from the rest.
Once you achieve this designation, you can expect to:
- Differentiate yourself and further boost your risk management credentials in the financial industry
- Enhance career growth and increase job mobility in the risk management sector
- Become a part of the global elite group of risk management professionals who are certified as Financial Risk Managers
- Be recognized globally as a leader in financial risk management
- Command better remuneration package and job opportunities
FRM vs CFA – Which is right for you?
This is a popular topic which has a whole article in itself.
We compare the differences and similarities between these designations, in terms of syllabus, difficulty and career objectives. Check it out!
FRM exam FAQs
What does FRM mean?
FRM stands for Financial Risk Manager, a professional designation offered by the Global Association of Risk Professionals (GARP).
How do I get FRM certification?
To achieve FRM certification it is necessary to pass 2 multiple choice exams, and to gain 2 years of relevant work experience.
How much does the FRM cost?
There is a one-off enrollment fee of $400 for new candidates. For each parts, exam registration costs $600 for early birds, $800 for standard registration.
Is FRM worth it?
Achieving FRM certification is considered valuable by many professionals in the financial risk management sector, contributing towards improved career prospects and earning potential.
How long is the FRM exam?
FRM part 1 and FRM part 2 each consist of a multiple choice exam lasting 4 hours.
In addition to the exams, it’s necessary to demonstrate two years of relevant work experience.
How can I prepare for the FRM exam?
Firstly, make sure you create a study plan to allocate sufficient time to complete your readings. We have a free FRM study planner you can use.
There are a number of FRM prep courses, coaching and training solutions available to help you prepare for FRM exams. Check out our Offers page for study materials deals.
Is the FRM exam difficult?
When are FRM exams held?
Take a look at our FRM exam dates page for the latest information.
Are you considering this certification, as well as the CFA designation? Leave a comment below!
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