What is a 'Financial Risk Manager - FRM'

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.

BREAKING DOWN 'Financial Risk Manager - FRM'

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.

(To learn more about other financial certifications, see: The Alphabet Soup of Financial Certifications.)

Financial Risk Manager Exam

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.

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.

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%.

Financial Risk Manager 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. In addition, 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.

RELATED TERMS
  1. Chartered Financial Analyst (CFA)

    A chartered financial analyst is a professional designation given ...
  2. Series 24

    The Series 24 is an exam and license entitling the holder to ...
  3. Series 55

    The Series 55 is an exam and license that entitles the holder ...
  4. Associate In Information Technology ...

    Associate In Information Technology (AIT) designation is geared ...
  5. Series 42

    The Series 42 is an exam and license for financial professionals ...
  6. Series 11

    The Series 11 is a securities license that allows holders to ...
Related Articles
  1. Financial Advisor

    How Hard are the CFA Exams?

    Learn about the difficulty of the CFA exams with a description of the tests, some statistics on pass rates and suggestions that can help you pass the exams.
  2. Personal Finance

    Prepare For Your CFA Exams

    Find out how to get yourself ready for these lengthy and often daunting exams.
  3. Financial Advisor

    Pass Your CFA Exams on the First Try

    Less than 20% of those who begin the Chartered Financial Analyst (CFA) designation reach the end. Become one of the elite who pass on the first try by using these simple study methods.
  4. Personal Finance

    How to Ace the CFA Level I Exam

    Prepare to ace the CFA Level 1 exam by studying systematically.
  5. Personal Finance

    What to Expect on the CFA Level I Exam

    The Level I exam for the Chartered Financial Analyst designation can be challenging. Here's what to expect.
  6. Personal Finance

    What To Do If You Failed Your CFA Exam

    Follow these steps to increase your odds of passing your next CFA exam.
  7. Personal Finance

    Tips for Taking the CFA Exam: Part 2

    Peter Mackey, head of exam development for the CFA Institute, shares his tips for passing the CFA level I, II and III exams.
  8. Personal Finance

    Tips for Taking the CFA Exam: Part 1

    Peter Mackey, head of exam development for the CFA Institute, shares his tips for taking the CFA level I, II and III exams.
  9. Financial Advisor

    Tips on Passing the CFA Level I on Your First Attempt

    Obtain valuable tips and helpful study instructions that can help you pass the Level 1 Chartered Financial Analyst exam on your first attempt.
  10. Personal Finance

    Putting Your CFA Level I on Your Resume

    Learn techniques for emphasizing your CFA Level I status in the Skills and Certifications or Professional Development section of your resume.
RELATED FAQS
  1. How many attempts at the Series 7 exam are permitted?

    There is no limit on the number of times you can attempt to pass the Series 7 exam, however, there are restrictions regarding ... Read Answer >>
  2. The FINRA Series 6 and Series 7 exams: The differences

    Learn about the regulatory exams needed to become a registered representative and the main differences between the Financial ... Read Answer >>
Trading Center