Thinking about what it takes to be an elite risk management professional? Introducing the FRM certification, this qualification is a globally recognized badge of expertise in the world of finance. But before learning about the certification, let’s learn about the meaning of FRM. FRM helps you climb the corporate ladder in banking, finance, or investment.
The FRM credential puts you on a course to master the art of risk management. In this article, we will walk you through what is FRM. What is the full form of FRM? FRM course details, its pros and cons, FRM exam procedure, FRM levels, Financial Risk Manager salary, FRM in banking, and Financial Risk Management certification in detail.Â
As the field of finance evolves at a fast pace, so do careers in finance. One such profession that’s gaining popularity among the others is Financial Risk Management. After the pandemic, it became essential for several companies to risk-proof their financial management. To do that it is necessary to have an in-house expert who can analyse all the financial statements of the company and understand the impending risk factors that can be eliminated. FRM is a niche profession to be in and brings exciting challenges for those who possess an interest in this field. Every MNC, fast-growing start-up and HNI is now sensing the need to hire a Financial Risk Manager.
In this article, we will walk you through what is FRM? FRM full form. FRM course details, eligibility, its pros and cons, FRM exam procedure, FRM levels, Financial Risk Manager salary, FRM in banking, and Financial Risk Management certification in detail.Â
What is FRM?Â
FRM full form – Financial Risk Manager (FRM), is a professional certification awarded by the Global Association of Risk Professionals (GARP). Experts recognize it worldwide as the standard of expertise in financial risk management. The Financial Risk Management certification is for people who want to build careers in risk-related fields. This includes areas like market risk, credit risk, operational risk, and investment management.
The FRM certification is highly regarded within the financial industry. The course is often sought by professionals working in banking, asset management, insurance, consulting, and regulatory agencies. This course is a pretty challenging program covering topics related to risk management: quantitative analysis, financial markets, valuation models, and risk measurement.
This certification prepares you with a profound level of knowledge in risk management principles. While increasing your credibility and marketable features within the finance field.
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FRM Course Details
Now, what is the meaning of FRM? FRM stands for Financial Risk Manager. A professional designation provided by the Global Association of Risk Professionals to individuals showing expertise in handling financial risk. The program is divided into two parts:
Part I FRM: Part 1 of FRM teaches you the tools to analyze the topics in Part 2. This section covers the essentials. You will focus on quantitative analysis, risk management principles, financial markets, and valuation models.
Part II FRM: And now you put all these tools you have learned to work. This part teaches real-world applications with market, credit, and operational risk, even the newest trends in financial markets.
You can complete the FRM syllabus within a year, but generally, it takes 1.5 to 2 years to finish. The exams take place twice a year, in May and November, at various locations around the world.
| Differentiators | Financial Risk Management |
| Organizing Body | GARP: Global Association of Risk Professionals |
| Course Duration | 1 to 2 years |
| Difficulty Level (passing percentage) | 45% for Part I and 63% for Part II |
| Eligibility Criteria | An undergraduate in the final year of their degree can also apply for the FRM course. However, you need to clear your part 1 to appear for the part two examinations. Within the 5 years of your learning journey, you must also have 2 years of relevant work experience. |
| Career Scope | Job profiles you can explore
Risk Analyst Risk Manager Credit Risk Analyst Market Risk Analyst Regulatory Risk Analyst |
| Top Hiring Firms | PwC
ICBC JP Morgan Chase Consulting Firms Hedge Funds |
FRM Course EligibilityÂ
There aren’t any strict prerequisites to joining the FRM program! While it does help to have a background in finance, economics, or mathematics. Anyone interested in risk management can enroll.
You can appear in the Part 1 exam as early as in the 1st year of your college. However to obtain a certificate you need to complete both parts of the exam within 4 years of applying for Part 1. Along with having a minimum of two years of relevant work experience to earn the much-sought-after FRM title.
Advantages vs Disadvantages of FRM:
Advantages of FRM
Some pros of doing FRM are mentioned below:Â
- Global Credibility: It is like having a golden ticket for any risk management job around the world.
- Expert-Level Knowledge: You will gain specialized knowledge that many industries need. This is especially true in banking, insurance, and investment.
- Career Boost: Generally, holders of the FRM qualification progress career-wise at faster rates and usually command higher salaries.
Disadvantages of FRM
Some cons of doing FRM are mentioned below:
- Tough Exams: The exams are manageable but not simple. They require careful preparation and study time.
- Investment: Be it time or money, the preparation involved for FRM is not cheap.
- Experience Required: If you are a fresher, needing two years of work experience may feel like a setback.
So, is FRM certification the correct option for you? If risk management is something that interests you? Financial Risk Management might be the career stimulus you are looking for!
FRM Exam Pattern
The process of FRM certification includes passing two sequential exams: FRM Part 1 and FRM Part 2. These exams have been specifically designed to test the candidate’s knowledge and understanding of concepts, techniques, and tools about financial risk management.
FRM Part 1: This part provides the candidate with the foundation necessary in risk management, consisting of four major topics: Foundations of Risk Management, Quantitative Analysis, Financial Markets and Products, and Valuation and Risk Models. The part 1 paper brings one hundred multiple-choice questions, and it is held in May and November. The duration of the exam is four hours.
FRM Part 2: FRM Part 2 expands on topics introduced in Part 1 and goes on to discuss the actual implementation of risk management strategies. Market Risk Measurement and Management, Credit Risk Measurement and Management, Operational Risk and Resiliency, Liquidity and Treasury Risk Measurement and Management, and Risk Management and Investment Management will be discussed. The format of this test is the same as that of Part 1, comprising 100 multiple-choice questions, and the dates of examination for both parts are the same.
FRM Syllabus
The syllabus is discussed in detail below, please note that the weightage of each subject in percentage is written beside their name in brackets.Â
FRM Part 1Â
- Foundations of Risk Management (20%): Understand the concept of risk, the role of the risk manager, corporate governance, and foundations of financial risk management techniques.
- Quantitative Analysis (20%): Probability theory, statistics, time series analysis, and regression analysis, are major areas within the purview of risk management.
- Financial Markets and Products (30%): Covers the various financial markets including equity, fixed income, derivatives, and foreign exchange.Â
- Valuation and Risk Models (30%): This section concerns models for valuing financial products and measuring the risks of holding them.Â
FRM Part 2Â
- Market Risk Measurement and Management (20%): This will take an in-depth view of how to measure and manage market risks.
- Credit Risk Measurement and Management (20%): The risk associated with credit exposure assessment and management.Â
- Operational Risk and Resiliency (20%): It deals with the process of operational risk management and business continuity.Â
- Liquidity and Treasury Risk Measurement and Management (15%): This section deals with the risks associated with liquidity and treasury management.Â
- Risk Management and Investment Management (15%): It deals with integrating risk management practices under investment management.
Current Issues in Financial Markets (10%): Emphasises reviewing the recent trends and issues in the financial markets.
Cost of Pursuing FRM
The cost of pursuing an FRM certification includes registration fees, examination fees, and probable coaching fees. Here’s a breakdown:
FRM Fees for New Candidates
Enrollment Fee: The first time you enroll for the FRM Program, you will have to pay a one-time Enrollment Fee of USD 400. The amount is not refundable.
Examination Fee: The Exam fees depend on when you register.
Early Registration: USD 600 per part
Standard Registration: USD 800 per part
FRM Fees for Repeat Candidates
Candidates who are returning for a repeat attempt or to take the second part do not have to pay the enrolment fee again. Only the examination fee has to be paid, which remains the same as the above-mentioned, i.e., USD 600–800 depending on the period of registration.
FRM Average Coaching Fee
Though not compulsory, most candidates go for coaching classes to be properly trained for the examinations. On average, FRM coaching classes are going to cost between INR 30,000 to INR 60,000 for each part. The factors that influence the price of coaching include the type of institute one is getting coaching from, the mode of learning, that is, online or offline, and the comprehensiveness of the study materials provided.
FRM Average Coaching Fee
The average coaching fee for FRM online and offline classes are as followsÂ
Online Coaching: Starting from INR 9000
Classroom Coaching: Starting from INR 30,000
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FRM Career Scope in India & Abroad
Attainment of the Financial Risk Manager certification leads to the opening of a host of career opportunities within India and abroad. With financial systems getting increasingly complex, demand for skilled professionals in risk management is soaring all across the globe.
Career Opportunities in India
Within India, FRMs are highly in demand. Key locations would be financial centers like Mumbai, Delhi, Bangalore, and Hyderabad. Some of the important roles are:
Risk Manager: Mitigate financial risks in the BFSI sectors.
Credit Risk Analyst: Assess creditworthiness and manage lending risk.
Market Risk Analyst: Analyze and manage market risks like stock price fluctuations and interest rate fluctuations.
Operational Risk Manager: Identify and mitigate the risks arising out of internal processes and external events.
Investment Risk Manager: Manage risks in investment portfolios.
From ICICI Bank and HDFC Bank to Kotak Mahindra Bank and Axis Bank, almost all leading banks in the country and international banks with operations in India like Citi and HSBC, look for FRMs amongst other qualifications. Even consulting firms like Deloitte, KPMG, EY, and PwC consider FRM as one of the more important qualifications.
Career Opportunities in Aboard
This qualification is considered very prestigious and well-compensated abroad, especially in New York, London, Hong Kong, Singapore, and Dubai. One can find employment in the following areas:
CRO: Chief Risk Officer; oversees all risk management efforts at an executive level.Â
Quantitative Risk Analyst: Develop mathematical modelling to assess and manage risk.Â
Portfolio Manager: Balance risk-return in investment portfolios.Â
Treasury Manager: Manage liquidity and financial risk for corporations.Â
Global Risk Analyst: Manage regional risks for global companies.
These FRMs are also wanted by top global banks: JPMorgan Chase, Goldman Sachs, Morgan Stanley, and such financial firms as BlackRock and Vanguard. The FRM designation is also coveted by multinational companies like General Electric, IBM, and Microsoft.
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FRM Salary in India
Financial Risk Manager Salary in India differs based on various factors, including experience, location, and the size of the organization. The average salary for an entry-level position financial risk manager is between INR 6,00,000 to INR 15,00,000.
FRM Salary in AbroadÂ
An FRM certification opens the door to many top jobs and offers high salaries. Salaries for FRM-certified professionals differ significantly from country to country, based on demand in a given financial market. Here is a brief overview of what you can expect as a professional in the FRM field in different countries.
| Countries | Average Salary of a Financial Risk Manager |
| USA | $1,10,000 to $1,50,000 |
| UK | £75,000 to £80,000 |
| Canada | CAD 1,20,000 to CAD 1,25,000 |
| UAE | AED 60,000 to 63,000 |
| Australia | AUD 1,45,000 to 1,50,000 |
FRM Scholarships
Scholarships are available only to students and faculty at schools that are part of GARP’s Academic Partner Program. The program administrator at partner institutions can nominate up to six students and one faculty member each year.
These nominees will receive a scholarship to cover the registration fees for the FRM Part I Exam. This scholarship supports education in risk management. It provides financial aid to deserving candidates who excel academically.Â
FRM and Other CertificationsÂ
The following table showcases information about other certifications along with FRM:
| Certification | Focus Area | Course Structure | Duration |
| FRM | Financial Risk Management | Two parts: Part I (100 questions), and Part II (80 questions) | 1-2 years |
| CFA | Investment Management | Three levels cover ethics, portfolio management, etc. | 2-4 years |
| CMA | Management Accounting | Two parts: financial planning, analysis, and control | 6-12 months per part |
| CAIA | Alternative Investments | Two levels focusing on hedge funds, private equity | 1-2 years |
Employment Benefits of Earning the FRM Certification
The following are some of the benefits of earning the FRM certification:Â
Career Advancement: Acquiring the FRM qualification maximizes the opportunity for advancement in risk management areas, thus providing a high-value position in any organization.
Higher Salary Potential: The salary for FRM-qualified experts is normally higher as compared to non-qualified counterparts. The finance sector highly regards the relevance of FRM qualification.
Global Recognition: The FRM qualification enjoys global recognition, which makes work opportunities easier across various financial sectors worldwide.
Proof of Skills: FRM certification shows that a person understands risk management principles. This boosts employers’ confidence in these workers.
Opportunity to Network: You gain access to a world network of finance professionals by joining GARP. Opening doors to further collaborations and job opportunities.
Portability: The skills are transferable in many variants of the field, including banking, investment management, and consulting thus offering flexibility in careers.
Conclusion
The Financial Risk Manager certification can be a career game-changer in finance. The course teaches you the ability to steer through complex financial risks. You will be an instrumental element in organizations.
Whether you are starting in risk management or trying to get to the top of the business world around the world. The FRM certification avails the credibility and expertise needed to make a statement in the fiercely competitive job market.
 If you love running financial risks or would like to further your career in finance, the FRM will be the right credential for you. It opens doors to some exciting and lucrative career opportunities worldwide. Enrol in Zell Education’s FRM program today!
FAQ’s on Financial Risk Management (FRM):Â
What is FRM? And its full form.
FRM’s full form is Financial Risk Management.Â
FRM meaning Financial Risk Manager, is a designation that represents the global certification of risk professionals. It identifies a person who has gained competence in identifying, quantifying, and managing financial risks in all entities, and more specifically in banking, insurance, and asset management.
Who is eligible for the FRM course?
Any person may apply to take the FRM Examination. However, it is advisable that you have some background in finance or related disciplines. If you have passed both Parts 1 and 2 FRM Examination and gained two years of relevant work experience you can be certified.
What is the salary of an FRM?
The annual compensation range for FRM-certified professionals in India is anywhere between ₹6,00,000 to ₹15,00,000 lakh per annum, depending on one’s experience and role. Abroad, this amount can be even more variable, so FRM professionals working in the USA would have an annual compensation of about $1,10,000 to $1,50,000.
What is the course duration of FRM?
The FRM certification usually can be completed within a period of one to two years depending on candidates’ study pace and the schedule in which they complete their exams.
What are the job responsibilities of an FRM professional?
An FRM identifies, assesses, and mitigates financial risks within an organization. This would include roles such as risk management, credit analysis, market risk analysis, operational risk management, and others.