What Is The FRM Exam? A Great Beginner’s Guide

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CFA? Why not FRM?

If you’re keen on a career in risk management, consider the Financial Risk Manager (FRM) program by by the Global Association of Risk Professionals (GARP): a two-part, self study set of examinations with global recognition. 

This updated guide is packed with the latest information that will aid your decision making on FRM certification. 



Overview of the FRM Certification

Since the inception of FRM program in 1997, more than 50,000 certified FRMs have successfully obtained the designation. They are employed internationally at nearly every major bank, asset management firms, hedge funds, consulting firms, and regulators.

FRM Exam Candidate Registration Numbers Since 2009

There is fast-growing demand for the FRM certification – registrations for the FRM exams have grown by an average of 13% per year since 2009, registering a growth of 20% in 2017-2018 alone. 


What Is The FRM Exam? A Quick Overview

What is the FRM Exam? A Quick Overview

The FRM exam is a two-part examination consisting of a 4 hour multiple choice exam each.

There are some recent changes due the COVID-19 pandemic:

  • May20 exams were postponed globally and replaced by a one-off exam slot in October 2020.
  • GARP announced that FRM exams will transition to computer-based testing (CBT) in 2021, so the last paper-based exams would be Nov20 Part 1 and May21 Part 2. 
  • From 2021, there would be 3 exam windows for Part 1 (May, July and November); and 2 exam windows for Part 2 (May and November/December). 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 FRM exam center here.

In terms of pass criteria, there are no negative markings for incorrect answers. The passing score is determined by the FRM Committee each year.

The exam results are sent to candidates via email approximately 6 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

FRM exam historical pass rate since 2010

The latest FRM exam results (Nov 2019) recorded pass rates for Part 1 and Part 2 at 46% and 59% respectively.

Since 2010, the historical pass rates for Part 1 ranges from 39%-53%, with a 10-year average of 46%. On the other hand, Part 2’s pass rates ranges from 50%-62%, with a higher 10-year average of 56%.


FRM Exam Topics & Weightings

FRM Part 1 Topics

​The FRM Part 1 curriculum covers the tools used to assess financial risk. The topics and percentages are as below:

FRM Part 1 Topic AreasTopic 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 FRM Exam Part 2 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: ​

FRM Part 2 Topic AreasTopic 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 Exam Fees

There is a recent increase in FRM exam fees due to the transition to computer-based exams. Here are the latest FRM exam fees:​

Fees in USD ($)FRM Part 1FRM Part 2
Enrollment​ (one-off)$400
Early Registration$550$550
Standard Registration$750$750

There is a one-off enrollment fee of $400 that applies to first time FRM candidates. So if you’re retaking Part 1 exams, the exam fee varies between $550-$750 only depending on your registration date.

In contrast, if you’re new to FRM, you’ll need to add a one-off enrollment fee of $400 on top of that. 

From 2021, the fees for Part 2 FRM candidates are the same as Part 1 (excluding the one-off enrollment fee), ranging from $550-$750 depending on registration date. 


FRM Exam Dates & Key Registration Deadlines

For 2021’s May and July’s exams, registration will open on 1st Dec 2020. Stay updated with the key exam deadlines below:

Key DeadlinesMay (Part 1 & 2) and
July (Part 1 only) FRM Exams
November (Part 1) /
December (Part 2) FRM Exams
Registration Opens1 December 20201 May 2021
Scheduling Opens15 December 202015 May 2021
Early Registration Ends31 January 202131 July 2021
Special (RAD)* Requests Due
Special (ADA)** Requests Due
28 February 202131 August 2021
Registration Closes
Last Day to Defer to next Exam
31 March 202130 September 2021
Last day to schedule/reschedule Exam
Last day to select/change exam sites
8 April 202120 October 2021
Exam windows and dates8-21 May 2021 (FRM Part 1)
10-23 July 2021 (FRM Part 1)
15 May 2021 (FRM Part 2)
13-26 Nov 2021 (FRM Part 1)
4-10 Dec 2021 (FRM Part 2)

Request for alternative exam date for religious reasons only (RAD)
** Accommodations for Americans with Disabilities Act (ADA)


What Are the FRM Exam Requirements?

In order to be certified as a Financial Risk Manager (FRM) and be able to use the FRM designation after your name, the following conditions must be fulfilled:

  • Pass the FRM Exam Part 1;
  • Pass the FRM Exam 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 FRM-certified:

  • Once a candidate passes FRM Part 1, he/she must then pass the FRM Part 2 within 4 years.
  • Then, the candidate will have 5 years from the date of passing FRM 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

FRM certificate is one 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 FRM-certified
  • 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?

In short, FRM is highly specialized and has a stronger focus on risk management, whereas the CFA designation covers a broader scope of financial analysis and investment topics. 

From a career building perspective, both FRM and CFA stand on equal footing as both are globally recognized designations with ample employment opportunities in their respective areas of expertise. Plenty of finance professionals obtain both qualifications to better perform in their roles and career.

​It really depends on your preferred career route: if you’re into risk management, FRM is the clear choice. If you’re less sure but keen on a career in finance, perhaps CFA is a better choice for a broader finance base.

Here’s a quick summary comparing both designations:

CFAFRM
Study Areas10 Topics: Ethics, Quantitative Methods, Economics, Financial Reporting & Analysis, Corporate Finance, Equities, Fixed Income, Derivatives, Alternative, Portfolio Management.
​​​
​10 Topics: 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.
Exam Levels / Parts3 levels (fastest route is in 15-18 months)2 Parts (you can sit for both parts in one exam day)
Exam FrequencyFrom 2021, CFA exams will transition to computer-based testing for all levels with increased frequency:

Level 1: 4x a year (Feb, May, Aug and Nov).
Level 2: Twice a year (May and Aug in 2021, and 2022 onwards Feb and Aug).
Level 3: Twice a year (May and November).
Part 1: 3x a year (May, Jul, Nov​)
Part 2: twice a year (May, Nov)​
Exam FormatLevel 1: Multiple choice questionsLevel 2: Item set questions (multiple choice)Level 3: Item set and essay questions Transitioning to computer-based exams from 2021 for all Parts:Part 1 & 2: Multiple choice questions​
Pass RatesThe range of CFA pass rates since 2010:Level 1: 36%-43%
Level 2: 39%-47%
Level 3: 46%-56%
The range of pass rates since 2010:​Part 1: 39%-53%
Part 2: 50%-62%
Fees and CostsOne-off Enrollment Fee: $450
Registration fee (per level): $700-1,000
One-off Enrollment Fee: $4002021 Registration Fee (per Part): $550-750
Study Hours NeededAt least 300 hours per level200-250 hours per part
Post Exam RequirementsTo become a CFA charterholder:
Pass all the 3 levels of CFA exams;
4 years of qualified investment work experience;
Submit reference letters for 2-3 professional references;
Become a regular member of CFA Institute;
adhere to CFA ethics and professional conduct.
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.​
Career Opportunities​Investment analysis, portfolio management, securities research, pension, insurance, corporate financeFinancial risk management​

Certified FRMs represent at nearly every major banking institution, government regulator, consulting firm and financial services institution around the world. For someone who looking to build up a career in financial risk management; FRM can be a pretty good bet.


Are you considering FRM, as well as the CFA designation? Leave a comment below!

Meanwhile, you may find these related articles in our Beginner’s Guide series of interest:

Sophie Macon
Author: Sophie Macon

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26 thoughts on “What Is The FRM Exam? A Great Beginner’s Guide”

  1. Hello,

    Are there any free resources / guides for FRM Part 1 and Part 2 exams ? Please share if you have any ?

    Thanks,

    Reply
    • Hi Sundar! What particular free resources and guides are you looking for?

      To start, we have adapted our CFA study planner for FRM study plans as well. Just fill in the form at the bottom of the article, select FRM and whether you’re Part 1 or Part 2, then click ‘Next’. 🙂

      Reply
      • Sure Sophie, I did’t knew how CFA study planner is going to help me in preparing FRM exams. Hence, I was looking for FRM specific resources.

        Reply
        • Hi Sundar, what I meant was that we created a separate FRM study planner as well, just haven’t broadly advertised it yet, hence it’s accessible only from that link.

          Reply
  2. Hyy, i am doing my fy.bcom.so when my graduation complets and I do Frm only so can I get a job in this field or I do some else?

    Reply
    • Hi Dave, getting an FRM certification doesn’t guarantee a job in the field. It does improve your prospects for a financial risk management job, but it also depends on your job application and interview process.

      Reply
  3. Hi, myself Santosh, i am a commerce graduate with 15 years of experience in Finance and accounts field. since 2017 i have been working under GRC (Governance Risk & compliance). If i take FRM along with my job, after completion of both the parts can i apply for the certification with this experiance.

    Reply
  4. Hi I am an FYBBA a student And want to make career in Finance I am willing to do both CFA+FRM so can you please suggest when to start and from where to start.

    Reply
  5. Hi! So, if while I am completing my Exam 1 and 2 I work full-time job related to financial risk manager, once I finish Exam 2 can I get the FRM certification?

    Or does the work experience start once you finish Exam 2?

    Thanks!

    Reply
    • Hi Marc, if you refer to the work experience section in this guide above, you’ll see that the 2 years work experience “cannot be more than 10 years prior to having passed the Part 2 exam”.

      So you should be able to get your FRM certification once you passed Part 2 and showed that your 2 year work experience is relevant (and not more than 10 years prior to passing Part 2).

      Reply
  6. Hello;
    I am currently working as Manager Operational Risk & Business Continuity Planning from last 6 years and now interested in FRM; going to register my self for upcoming exam.
    Is FRM is OK for me or not ?
    I have also plan to move in Canada by end of this year; please advice….

    Reply
  7. If some is having 10 years of experience. Is he eligible for FRM 2. As per the guidelines, he is not eligible.

    Reply
    • Hi Vishesh, think you may have misunderstood the FRM work experience requirements here: A candidate needs to show 2 years of professional full-time financial risk management work experience. And this work experience submitted cannot be more than 10 years PRIOR to having passed the Part 2 exam. So if someone has 10 years of relevant risk management experience (say from 2010-2020) before passing Part 2 exams in 2020, that is fine, because it is more than the 2 years required. However, say if you passed FRM Part 2 in 2020, but the last time your relevant risk management experience was from 2000-2011, that would NOT qualify even though you had 11 years risk management experience previously, as for FRM work experience purposes, you only have 1 year relevant experience since they do not count work experiences more than 10 years PRIOR to passing FRM Part 2. Hope this is clear!

      Reply
  8. Thank you so much for sharing this Sophie. It was very informative and answered several of my questions. Thanks a ton!

    Reply
  9. I am MCA and having 10 yrs exp. and in murex(Amrket risk and credit risk reorts in datamart) development 5 yrs in it .can i do FRM

    Reply

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