How to Become a Certified Financial Risk Manager
In this article, we have shared a guide on how to become a Certified Financial Risk Manager through the FRM programme offered by GARP. Read below to know the steps to achieve the goal.
How to Become a Certified Financial Risk Manager: Individuals who are passionate about making a career in finance and risk management, should consider becoming a Certified Financial Risk Manager (FRM). The Financial Risk Management certification is a globally recognized and rewarding certification in the finance industry. The FRM certification is regarded as a true standard of excellence in risk management and is a gateway for individuals in the finance industry to achieve new career heights in the risk management profession.
Financial Risk Management professionals can assess, monitor and manage risks in real-world situations. They tend to gain knowledge which is applicable across industries and functional roles. While at it, they also join a network of top risk managers. In this article, we have shared a guide on how to become a Certified Financial Risk Manager. Read below to know the steps to achieve the goal.
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Understanding the FRM Certification
Financial Risk Management Certification is offered by the Global Association of Risk Professionals (GARP). It is solely designed for professionals who wish to build a career in the risk management field including market risk, credit risk and operational risk. As mentioned above, this certification is globally recognized as one of the premier certifications for finance professionals.
The certification requires the students to pass a comprehensive two-part exam and complete two years of relevant work experience in financial risk management. The exam is recognized in more than 90 countries across the globe and is designed to measure an FRM’s ability to manage risk in the global environment.
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Meeting the FRM Eligibility Criteria
The candidates looking for the FRM certification must hold a bachelor’s degree from a recognized university. Candidates should also have two years of work experience in financial risk management. Candidates with a strong mathematical, financial and economic background may benefit.
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FRM Registration
The exam is usually conducted in May and November every year. Candidates must visit the official website of GARP to register for the FRM exam. To register candidates can follow the below-mentioned steps:
- Visit the official website of GARP, i.e. www.garp.org
- Under the FRM section on the homepage, click on the ‘Register for FRM exam’ option
- Now, fill in the required details such as email ID, mobile number, name, test centre, etc.
- Pay the requisite registration fee and enrolment fee through credit card, wire transfer, ACH, or Alipay
FRM Application Fee
Refer to the table below to know the FRM application fee:
| Specifications |
Fee in USD |
|---|---|
| Enrolment fee |
USD 400 |
| Early registration fee |
USD 600 |
| Standard Registration Fee |
USD 800 |
Financial Risk Management Exam Pattern
The questions in the FRM exam are related to real-world situations and test the candidate’s practical knowledge. Candidates appearing for the exam are expected to understand the concepts of financial risk management and approaches in real-time experiences and activities.
The exam is divided into two parts. There are 100 questions in Part 1 of the exam which focus on the following topics:
| Topic |
Weightage |
|---|---|
| Foundations of Risk Management |
20% |
| Quantitative Analysis |
20% |
| Financial Markets and Products |
30% |
| Valuation and Risk Models |
30% |
Part 2 of the FRM exam has 80 questions and focuses on the following topics:
| Topic |
Weightage |
|---|---|
| Market Risk Management and Measurement |
20% |
| Credit Risk Measurement and Management |
20% |
| Operational Risk and Resiliency |
20% |
| Liquidity and Treasury Risk Management and Measurement |
15% |
| Risk Management and Investment Management |
15% |
| Current Issues in Financial Markets |
10% |
The study material to prepare for the FRM exam is available on the official website of GARP. Students can also opt for taking online sessions and joining coaching institutes.
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Passing the Financial Risk Management Exam
To become a certified financial risk manager, it is essential to pass both parts of the FRM exam. The FRM part one of the exam will be conducted from November 9, 2024, to November 15, 2024. Part 2 of the exam will be conducted between November 16, 2024, and November 19, 2024.
The exam will be conducted in the computer-based test mode across various test centres. Candidates must focus on achieving at least 70% in each part of the FRM exam to pass the exam. Historically, the FRM pass rates have not been very high. For the November 2023 exams, the FRM pass rate was 45% for Part 1 and 53% for Part 2.
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Gaining Professional FRM Experience
After passing both parts of the FRM exam, students need to gain a relevant professional work experience of two years in financial risk management. The students must ensure that their experience aligns with their skills and knowledge tested in the FRM curriculum.
To showcase their professional experience, students must provide a detailed description of their role in financial risk management, consisting of at least five sentences, and submit it to GARP within five years of passing Part II of the FRM exam. Once submitted, GARP will review and verify their experience. Upon approval, students will officially be recognized as Certified FRM and listed in GARP’s registry.
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Maintaining FRM Certification
To maintain the FRM certification status, students must complete at least 20 hours of Continuing Professional Education (CPE) offered by GARP per year and pay the annual maintenance fee at GARP. This is an ongoing process to maintain your FRM certification and it is important to stay updated with the latest developments and updates in finance and risk management.
Therefore, becoming a Certified Risk Manager can be challenging but is a rewarding career option. The FRM certification required dedication, hard work and strong work commitments for professional development. Having said that, having an FRM certification has numerous perks and benefits and opens doors to many opportunities. FRM certification demonstrates the expertise of the individual in managing financial risks, setting them apart from others in the finance industry. Pursuing an FRM also shows the commitment to one’s career and towards continuing learning and development in the professional sphere.
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