Financial risk managers play an invaluable role in maintaining a company’s fiscal health by seeking to identify, analyze and address the risks associated with a company’s business operations.
Today, the profession is highly valued, with median annual salaries of $128K in the US, going up to $200K+ for top 10% of risk management professionals.
For those interested in pursuing this career path, there are two highly regarded risk management certifications in the market: Financial Risk Manager (FRM) and Professional Risk Manager (PRM).
But which risk management certification is better for your career?
Let’s look at the key similarities and differences between FRM vs PRM:
What is FRM?
The Financial Risk Manager (FRM) certification is the leading certification for risk managers offered by Global Association of Risk Professionals (GARP). It is a Masters-degree equivalent credential that is recognized globally.
With the FRM certification, you’ll hone your skillsets in identifying, analyzing, and mitigating different types of market-based and non-market based financial risks at a high level, which is highly demanded by top firms and financial organizations worldwide.
We’ve covered quite a bit about the FRM certification too, check out these articles to learn more:
- What is the FRM Certification? A Great Beginner’s Guide
- FRM Exam Pass Rates: How Hard Are FRM Exams?
- FRM Fees: How Much Does It Truly Cost?
What is PRM?
PRM is offered by The Professional Risk Managers’ International Association (PRMIA) to enhance risk assessment and mitigation knowledge. It is an increasingly recognized, graduate-level credential for risk management professionals, designed to help them develop a detailed understanding of financial risk management.
This certification is generally deemed to be more focused on the quantitative aspect of financial risk modeling, which plays a critical role in predictive financial analysis.
FRM vs PRM difficulty
FRM is benchmarked by UK NARIC (UK national agency for international qualifications and skills) as a Masters-degree equivalent program.
While PRM was not benchmarked by the same agency, its website mentions that it is also a graduate level program. So at first sight, they seem equally difficult in this sense.
The general consensus from candidates is that FRM is more difficult and in-depth, whilst PRM is moderately difficult and covers more foundational topics in comparison.
FRM exams also generally have lower pass rates and higher passing score required to pass (see next section).
FRM vs PRM: Summary of key differences
While the objective of FRM and PRM is essentially similar, there are several differences between the two certifications.
Here’s a summary comparing both FRM vs PRM:
|Organization||Global Association of Risk Professionals (GARP), USA||Professional Risk Managers’ International Association (PRMIA), USA|
|Exam prerequisites||No specific academic or work experience requirements.|
Undergraduates in the final year of their course programs are eligible to enroll and sit for the exam.
|– Be a current PRMIA member, AND one of the following:|
1) Graduate school (i.e. MBA, MSF, MQF etc.); or
2) current CFA charterholder; or
3) Bachelor’s degree with 2 years full time work experience; or
4) 4 years full time, work experience in financial services (including regulatory or rating industries), or in risk management of any industry.
|Exam Levels / Parts||2 Parts (you can sit for both parts in one exam day)||In 2019, it shifted to a 2 Parts exam format (previously 4)|
|Course duration||A candidate must pass Part 2 within 4 years of passing Part 1.||A candidate must pass Part 2 within 2 years of passing Part 1.|
|Syllabus||The core curriculum includes:|
– Foundations of Risk Management
– Quantitative Analysis
– Financial Markets & Products
– Valuation and Risk Models
– Market Risk
– Credit Risk
– Operational Risk
– Liquidity & Treasury Risk
– Risk Management in Investment Management
– Current Issues
|The course covers the following:|
– Financial Theory, Markets & Instruments
– Mathematical Foundations of Risk Measurement
– Risk Management Frameworks & Operational Risk
– Credit Risk & Counterparty Credit Risk
– Market Risk, Asset Liability Management, Funds Transfer Pricing
– PRMIA Standards & Governance
*Exams are skewed towards quantitative knowledge testing
|Study Hours Needed||200-250 hours per Part||150-200 hours per Exam|
|Difficulty level||Very difficult.|
The range of FRM pass rates since 2010:
– Part 1: 39%-53%
– Part 2: 50%-62%
For Nov 2020 exams, the pass rate for Part 1 and Part 2 were 45% and 59% respectively.
Passing score is estimated to be 70% for all Parts of FRM.
Historical pass rate of 65%. The pass rates of the individual parts vary in the range of 59% to 78%.
Passing score is estimated to be 60% for all levels of PRM.
|Exam Frequency||In-person computer-based exams at test centres:|
Part 1: 3x a year (May, Jul, Nov)
Part 2: twice a year (May, Nov)
|In-person computer-based exams at test centres. Remotely-proctored exam also available.|
You can schedule for an exam slot most days of the year (except the month of January, April, July and October).
|Exam Format||Multiple choice questions in both Parts.||Multiple choice questions in all exams.|
|Fees and Costs||The overall cost (just exam registration fee) is $1,500-$1,900.|
This consists of a one-off $400 enrollment Fee, plus a registration fee of $550-750 per Part.
Once certified, note that GARP membership is NOT a prerequisite to use the FRM brand.
Please refer to our FRM fees article for a better total cost estimate.
|The overall cost of PRM designation is $1,430, which includes a program fee of $1,080, an application fee of $150 and membership fee of $200.|
Once certified, annual membership fee of $200 required for the rights to use the PRM brand.
|Post Exam Requirements||To become FRM-certified:|
– Pass both FRM papers;
– a minimum of 2 years professional full-time work experience in the area of financial risk management or another related field;
– maintain membership.
|Pass all PRM exams; |
Once PRM Certified status is achieved, after an initial grace period, recertification is required each calendar year.
Certified status is maintained by completing 20 CRL credits* per year and holding Sustaining or C-Suite Membership.
*Continued Risk Learning (CRL) credits can be earned by participating in a variety of structured and unstructured learning activities offered by PRMIA and non-PRMIA providers.
|Career Opportunities||Common profiles include:|
– Risk Assessment Manager
– Risk Management Analyst
– Financial Risk Consultant
– Investment Banker
|Common profiles include:|
– Risk Officer
– Predictive Analyst
– Investment Risk Manager
– Risk Analyst
FRM vs PRM: Which is right for you?
The choice of FRM vs PRM very much depends on:
- the time you have to devote to learning and the flexibility required,
- your career objectives,
- the level of global recognition desired,
- the specific certifications requirements set by a candidate’s organization.
One important attribute to keep in mind is that FRM has better global recognition as the chief qualification for risk professionals in the financial world.
As a result, many employers would recognize and value GARP’s FRM certification on your resume. Another plus point is that FRM exam fees are actually comparable to PRM’s, and it doesn’t require any ongoing membership fees after certification.
PRM exams are more flexible time wise, cheaper upfront (but with ongoing membership fees after certification), and is more quantitatively orientated.
Whichever you end up going with, both qualifications would provide you a good grounding in the latest risk management practices and open up a path to a risk management career.
Hope this helps you decide which certifications you would like to go for! If you have more questions, just comment below and I’ll try to help 🙂
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