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!
Overview of FRM
Since the inception of FRM program in 1997, more than 71,546 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 12% 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?
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 2 exam windows for Part 1 (May and November), and 2 exam windows for Part 2 (May and December) 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 a gauge of difficulty of the exams.
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%|
Fees and 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 $550-$750 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 $550-$750 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.
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!
Are you considering this certification, as well as the CFA designation? Leave a comment below!
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