Issued by the Global Association of Risk Professionals (GARP), the FRM (Financial Risk Manager) designation is a globally recognized qualification that’s designed for risk management professionals.
For anyone working in financial risk management, achieving the FRM status can be a great way to boost your career, provide the skills needed to land some of the best jobs in the sector, and potentially enabling you to earn a higher salary.
In this in-depth FRM salary guide, we will cover:
Let’s go!
Achieving the Financial Risk Manager qualification has various benefits:
One of the many benefits associated with obtaining an FRM certification involves the sheer number of specialty sectors which individuals can choose from. However, there are a range of roles that you would typically expect to be available when following an FRM career within the financial sector.
Each of these boasts its own unique challenges and therefore, the salaries will differ. For comparison, we’ll look at average salaries in USD, for roles based in the US.
A financial risk analyst will evaluate the potential impact of business decisions on multiple levels; therefore identifying any inherent risks. The average salary of this role is about $62K.
A market risk analyst will calculate the risks associated with investments and similar market-related fiscal strategies. Professionals can expect to earn about $100K.
This professional is concerned with issues such as compliance, legislative responsibilities and corporate transparency. In other words he or she will ensure that a company is compliant with all regulatory guidelines. Salaries range between $47K and $96K, with the average around $88K per year plus bonuses.
These analysts are often employed within banks and lending institutions. Their primary concern involves the risks associated with lending funds to third parties (both businesses and individuals). Credit risk specialists can expect to earn approximately $75K per year.
As the title suggests, risk managers oversee various operations related to FRM. They may also supervise subordinates; thus affording them more responsibility. The average base salary of a risk manager is about $100K, with bonuses of around 25% typically paid on top.
This managerial position is primarily concerned with the day-to-day operations of a company. Variables can include compliance, payroll, strategic decisions, and new marketing opportunities. Salaries typically range between $106K and $140K.
Corporate risk directors can expect to earn approximately $150K and up per year. This arises from the fact that they are often tasked with overseeing many of the roles previously mentioned and will be responsible for managing teams of managers and analysts.
A chief risk officer (CRO) is responsible for corporate-level risk management. Duties include identifying potential dangers, spearheading risk-mitigation efforts and communicating with subordinates. The average salary of a CRO in the US is about $325K.
Wages will vary in terms of the individual, his or her experience, the firm, and any potential bonuses that may be present, which at higher levels can reach as high as 50%-100% of the base salary.
Financial Risk Managers’ salaries will naturally vary in accordance with the exact type of role, the experience of the individual and the company itself.
As with most financial careers, regional disparities will also have an impact upon what an individual can expect to earn. When comparing different countries, it’s also important to consider other differences between locations such as living expenses, tax rates and essentials you’ll need to cover with your salary.
That said, based on a 2021 GARP membership survey report with more than 2,100 survey respondents, there are nonetheless some broad regional observations that can be made, despite the poor data quality of the report.
Globally, more than 2/3 of respondents reported making less than $100,000 salary, excluding bonuses, commission or other compensation. However, this may be attributed to the experience distribution of the survey respondents themselves:
Interestingly, there are clear regional differences which separates North America vs other regions.
In North America, GARP’s survey highlighted that 31% of survey participants made less than $100,000 base salary annually, excluding bonuses.
Here are the average base salary ranges (excluding bonuses) by experience levels of risk management professionals in North America:
It should also be noted that this region is associated with the highest level of growth, as more than 50% of FRM positions experienced salary increases of up to 5% from the previous year.
Looking at other data sources for the US market only, the average FRM salary in the United States is about $110,000. Once again, note that compensation also depends on the exact role and experience level.
For instance, risk analysts earn (on average) a salary of $62K, while the median salary of a Chief Risk Officer in the US was approximately $325K at the beginning of 2023.
Exact pay grades also differ from state to state and city to city, with roles in financial centers like New York and San Francisco typically offering the highest salaries in the US.
In Canada, the average salary for a Financial Risk Manager is $93k, with a range from $76k-114k a year.
At a senior risk manager level, the average base salary increases to $100k-129k a year.
In South America, GARP’s survey highlighted that 74% of survey participants earnedless than $50,000 base salary annually, excluding bonuses.
10% of South American survey participants records an average salary of $100k-150k, whilst another 9% earn between $150K-$200K per year. This is likely reflecting a more junior, less experienced profile of risk professionals there in this emerging market.
FRM salaries in the EMEA community are slightly lower, as:
Here are the average base salary ranges (excluding bonuses) by experience levels of risk management professionals in EMEA:
Looking at UK specifically, Financial Risk Managers working in London can expect to earn an average salary of around £80K per year, with £10K also awarded as bonus on top of their base pay on average.
Similar to the United States, salaries in the UK will vary in accordance with location and experience. For example, the average salary for a Chief Risk Officer in London is around £145K per year before bonuses.
In the Asia Pacific region, GARP’s survey highlighted that 80% of survey participants made less than $100,000 base salary annually, excluding bonuses. Similar to South America, this probably reflects a higher percentage of entry to mid level FRM specialists in the dataset.
It should be noted that this is a cursory overview of salary expectations as of 2021. A smaller proportion of individuals (such as executive, senior operational managers and directors) may very well earn significantly more.
Here are the average base salary ranges (excluding bonuses) by experience levels of risk management professionals in APAC:
According to the latest data, risk managers in Australia can expect to earn between AUD $135K and $155K per year (~USD $93k-107k equivalent). The highest salaries tend to be associated with major metropolitan areas such as Sydney, Perth and Melbourne.
FRM professionals located in Singapore can expect to earn on average just over SGD $105k per year (~USD $80k equivalent). However, senior specialists and those working for the top firms may be able to obtain significantly higher salaries, with compensation increasing to about SGD $325K (~USD $243k equivalent) for Chief Risk Officers at some well known banks.
At 300Hours, we also conduct our unbiased salary surveys globally to help understand the salary impact of obtaining various certifications.
Crucially, what differentiates our salary data from the rest is that we also remove the work experience effects to better isolate the value-add of a certification on salary levels.
Based on our limited dataset of certified FRMs, we can infer that globally, FRM-qualified candidates earn 29% more than candidates without FRM, even after taking into account work experience.
We have done this in-depth analysis for CFA salaries previously, and now we are extending it the FRM community and would need more data from FRM candidates and certified FRMs too.
This would allow us to remove the work experience effect and truly see if obtaining an FRM certification increases salary, and if so, by how much.
Just leave your details below:
It depends.
It is most likely to add value to risk professionals around intermediate to mid managerial levels.
As to how much more does a Financial Risk Manager earn over a non-FRM, we have a small dataset at this stage to conclude that certified FRMs on average earn 29% more than those without an FRM certification, even after removing the work experience effect.
Please help further our FRM salary research by filling out this survey, thank you!
FRM is benchmarked as a Masters degree equivalent qualification.
It has a recent pass rate range of 44%-51% for Part 1, and 57%-63% for Part 2.
While passing the exams is by no means easy, it’s certainly achievable. Those who are prepared to work hard and smart with a good study plan will generally have a good chance of performing well.
The FRM exam registration fees alone ranges between US$1,600-$2,000. Note that this includes the initial enrollment fee. Those who apply early may also be able to save up to $400 dollars when compared to standard registration.
There are some additional costs associated with FRM certification, and we estimate the total cost of FRM exams would be between $2,150 and $3,648 for both parts including all fees, study materials and calculator.
On average, it takes about two years to pass both Parts of the FRM exam.
Notwithstanding the two examinations, candidates must be employed within the field of risk management for a minimum of 2 years as well to be able to apply for the FRM designation.
United States residents who obtain an FRM designation can expect to enjoy an average base salary of roughly $98K.
More importantly, the exact pay range will vary in terms of experience, the company, the overall compensation package and location.
The average salary for UK based FRM professionals is around £80K, which is quite a bit higher than the average national salary of about £34K. Those working in London, and particularly at higher levels, can also expect to earn more.
The CFA exams are often regarded as some of the most difficult in the world, but having said this, some people consider FRM exams to be more difficult especially when compared to CFA Level 1 or 2, as they are more specialized.
That said, both qualifications are benchmarked by UK ENIC (UK National Information Centre) to be equivalent to a Masters level degree, so objectively they are similar in terms of difficulty.
This depends on one’s current career situation and experience.
When deciding whether it’s right for you, the cost of the FRM exams should also be taken into account. As of 2023, it is estimated that the total costs of completing both parts of the FRM exams- assuming consecutive passes – is between $2,150 – $3648. This includes the initial enrollment fee, calculator costs, study materials and registration fees.
While the cost to gain the FRM designation is not small, the potential return on this investment for someone working in a relevant field could be many multiples higher.
Overall, we would say that for individuals especially interested in a career in risk management, passing both parts of the FRM exam is certainly a worthwhile endeavour.
It should also be mentioned that an FRM certification may be valuable within other professional roles too. A handful of examples include wealth managers, asset management, marketing specialists and in-house compliance officers.
Typical salaries associated with FRM and CFA certifications is as follows:
FRM: Between $50K and $165K per year.
CFA: Between $45K and $180K per year.
On average, a CFA charterholder working in a sector such as portfolio management could expect to earn a base salary of about $126K, while a Financial Risk Manager’s average base salary is about $102K.
Once again, this is a broad overview and does not include such as commissions and profit-sharing schemes.
Based on those averages, CFA charterholders could typically expect to earn about 20% more than those with FRM certification after the first few years. Again, the exact figures depend on the specific individual, specialism, experience and location.
What do you think? What is your personal experience like as you progressed through the FRM certification? Let us know via a comment below!
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