Are you thinking about a career in risk management? The Financial Risk Management, or FRM exam offered by the Global Association of Risk Professionals (GARP) is your first step into new opportunities in banking, financial services, and asset management. Widely recognized around the world, FRM gives professionals the foundation to understand market risk, credit risk, investment management, and operational risk, subsequently one of the most sought-after skills in all sectors.
The Financial risk management exam is evolving, with emphasis on real-world execution and current industry practice. This guide will provide you with everything you need to know about your eligibility, syllabus, exam pattern, study plans, and more.
What is Financial Risk Management (FRM)?
The Financial Risk Management exam is a globally recognized credential, provided by GARP for individuals seeking to build a career in risk management. It is specially designed to equip individuals with detailed knowledge of risk assessment, gain control over financial institutions, and perform analysis.
The certification focuses on three critical areas: credit risk, operational risk and market risk and investment management, which are always changing in the landscape of finance globally.
The FRM certification has two levels – Part 1 covers the main concepts, and Part 2 is about how to apply risk management principles. FRM concentrates on situations and quantitative analysis, which allows great finance professionals to work together in a highly competitive global context to make a difference.
FRM Exam: Eligibility Criteria and Registration Procedure
One of the key benefits of the FRM exam is its open eligibility criteria, which make it more accessible to a broader range of professionals and students interested in the field of risk management.
Key Requirements: Qualifications and Experience
To enroll in the Financial Risk Management examination, GAPR does not set forth specific educational or professional requirements. You can register for the exam regardless of your academic background or specific professional experience.
To earn FRM certification, after completing the FRM course you must have at least 2 years of full-time professional work experience in the area of financial risk management or a related field. This work experience must be acquired within five years of passing the FRM Part 2 test.
How to Apply for Financial Risk Management Exams?
FRM examination registration is a simple process that may be conducted online via the GARP website. Key steps involve:
- Establish an account: Making an account on the GARP website is the first step. This becomes your portal for overall interactions with GARP, including exam registration and result checking.
- Register for Exam: After creating an account, you can register for the FRM examination Part 1. However, if you have already passed the Part 1 exam, you can move ahead to register for the Part 2 exam.
- Pay Examination Fees: After registration, pay the exam fees. These fees vary depending on when you register, as early registrations are eligible for reduced fees.
- Prepare and Appear for the Exam: Once you have completed registration, focus on exam preparation. GARP offers a range of study resources to assist you in preparing for the examination.
- Check Results: Post-exam, your results will be released on your GARP account. If you pass, you can focus on registering for the Part 2 exam.
- Provide Proof of your Professional Job Experience: To obtain FRM certification, submit work experience even if you pass both exam sections.
What is the Pattern of the FRM Exam?
The Financial Risk Management exam is divided into two parts, each addressing a different aspect of risk management. Both examinations include multiple-choice questions that evaluate your understanding and implementation of risk management concepts.
- FRM Part 1: It lays the groundwork for becoming a Financial Risk Manager. It focuses on methods for evaluating financial risk, including risk models and valuation, financial markets and products, quantitative analysis, and basic risk management ideas.
- FRM Part 2: It prioritizes the application of tools obtained in the Part 1 exam. It dives into market risk management, operational and integrated risk management, credit risk management, current issues in the financial markets, and risk management and investment management.
| Particulars | FRM Part 1 | FRM Part 2 |
| Number of Questions | 100 | 80 |
| Format | MCQs | MCQs |
| Duration | 4 hours | 4 hours |
FRM Examination: Key Topics and Weightage
FRM examination covers an extensive range of risk-based topics. For your better understanding, let us explore the syllabus for the FRM examination and the weightage for each topic, such as:
A) Part 1 Examination
The first part of the FRM examination prioritizes the fundamental risk management concepts, which are typically divided into four major topics:
| FRM Part 1 Subjects | Weightage |
| Quantitative Analysis | 20% |
| Financial Market and Products | 30% |
| Foundation of Risk Management | 20% |
| Valuation and Risk Models | 30% |
B) Part 2 Examination
Part 2 of the FRM examination focuses on the application of fundamental concepts that you have learned in Part 1 of the examination. It is usually separated into five primary topics:
| FRM Part 2 Subjects | Weightage |
| Market Risk Management and Measures | 20% |
| Operational Risk and Resiliency | 20% |
| Credit Risk Measurement and Management | 20% |
| Risk Management and Investment Management | 15% |
| Liquidity and Treasury Risk Measurement and Management | 15% |
| Current Issues in Financial Markets | 15% |
Final Takeaway!
Beginning your FRM journey may seem challenging, but with proper preparation and the right mindset, it is achievable. This globally recognized certification deepens a candidate’s understanding of financial risk but opens doors to high-impact roles in risk management and finance.
If you are to level up your career, the FRM exam can be a smart step towards becoming a certified risk expert. Connect with a Zell Education counsellor to explore more about the Financial Risk Management (FRM) course today!
FAQs
1. Who should pursue FRM certification?
Professionals in the risk management, finance, banking, and investment fields can benefit the most. This certification is ideal for risk officers, finance graduates and analysts.
2. How long does it take to complete the FRM course?
Completing both sections of the FRM test typically takes one to two years. However, after passing the Part 1 exam, you have four years to finish the Part 2 exam.
3. What career opportunities can candidates expect post FRM qualification?
FRM qualifiers can work as portfolio managers, risk analysts, and credit analysts. It opens doors in consulting firms, asset management, banks and even regulatory bodies.
4. When are FRM examinations conducted?
The FRM Part 1 exam is held in May, August, and November. Whereas, Part 2 examination is conducted in May and November. Registration opens several months in advance.