Financial Risk Manager (FRM) refers to a professional designation issued by the Global Association of Risk Professionals (GARP). The GARP FRM accreditation is globally recognized as the premier certification for financial risk professionals. It is suitable for individuals who want specialized knowledge in assessing risk on behalf of banks, insurance companies, accounting firms, regulatory agencies, and asset management firms.
To receive the FRM designation, candidates must successfully complete a comprehensive, two-part exam and demonstrate that they have two years of work experience in financial risk management. Professionals who hold the FRM designation can participate in optional continued professional development. The FRM program follows the major strategic disciplines of risk management: market risk, credit risk, operational risk, and investment management. Recognized in over 90 countries, the exam is designed to measure a financial risk manager's ability to manage risk in a global environment.
FRM Exam 2019
The FRM Exam covers the application of risk management tools and techniques to the investment management process. Questions are designed to be practical and related to real-world work experiences, and candidates are expected to understand risk management concepts and approaches as they would apply to a risk manager's day-to-day activities.
The FRM exam consists of two parts, Part I and Part II. In Part I, candidates must answer 100 multiple-choice questions within four hours. This section of the exam tests knowledge of the tools used to assess financial risks, such as quantitative analysis, fundamental risk management concepts, financial markets and products, and risk models. The FRM Exam Part I focuses on the essential tools and concepts required to assess financial risk. Passing the FRM Exam Part I is the first step for an individual to become a Certified FRM.
Part I curriculum covers topics related to the tools used to assess risk: Foundations of Risk Management (20%) Quantitative Analysis (20%) Financial Markets and Products (30%) Valuation and Risk Models (30%)
Part II of the exam requires candidates to complete 80 multiple-choice questions within four hours. This section of the exam requires candidates to apply Part I knowledge to market, credit, operational and integrated risk management; it also examines topical risk management issues. Both exams are held in May and November each year at over 100 different global locations. The FRM Exam Part II focuses on the practical application of risk management tools covered in Part I to specific areas of risk management such as credit risk, market risk, and operational risk.
Part II curriculum focuses on topics related to the practical application of risk management tools established in Part I: Market Risk Measurement and Management (25%) Credit Risk Measurement and Management (25%) Operational and Integrated Risk Management (25%) Risk Management in Investment Management (15%) Current Issues in Financial Markets (10%)
To prepare for the FRM exam, GARP releases a study guide, a four-volume book/e-book set and access to practice exams. Candidates receive a pass or fail result that is typically emailed six weeks after the exam. The FRM Committee determines the passing scores. Candidates also receive quartile results that allow them to compare their results to other candidates. Statistics show that Part I of the FRM exam is more difficult, with an average pass rate of 44.5% between 2013 and 2017. Conversely, the pass rate for Part II of the exam over the same period is 55.2%.
FRM Exam Details
Time Limit: 4 hours
Number of Questions: 100 for Part I; 80 for Part II
Format: Multiple Choice
Prerequisites: None for part I; Passing FRM Exam Part I for Part II.
Exam Date(s): May and November
Exam Results: Usually provided within 60 days
Official Exam Website: http://www.garp.org/frm/
FRM Exam Fees
The fee to take Part I of the FRM exam in 2018, either in May or November, is $350 for early registration, $475 for standard registration, and $650 for late registration. Also, there is a $400 registration fee due when you sign up for Part I of the exam. For Part II, the fees also are $350/$475/$650, with no additional registration fee. Consult the GARP website for exact exam dates and registration schedules.