How to Become a Certified Financial Risk Manager

How to Become a Certified Financial Risk Manager (FRM®)

The FRM stands for Financial Risk Manager. This is a certification that is provided by the Global Association of Risk Professionals (GARP). This Risk Management Training is essential as it validates your efficiency at taking risks and tackling them with ease.

So, the following are the steps you need to take in order to become an FRM certificate holder.

Step 1: Registration for the FRM® Exam Part I

You are required to register in order to take the exam. The best part is there are no education prerequisites. The exam is divided into two parts they are Part I and ll. Both Part I and Part II are generally provided in the months of May and November. An important thing to be noted is that there has been a deviation in this aspect in the year 2021. An extra July exam date has been added for the exam in Part I. Part II exam shall be provided in the months of May and  December. So, far as the cost of registering for the exam is concerned, it has been designed into two registration periods, namely, the early and the standard. One can, if he or she wants to, take both parts of the exam on the very same day. However, an important thing to be noted is, in case you are willing, the Part II answers will be graded only if you passed Part I.

Step 2: Pass FRM® Exam Part I

The next step is to pass the FRM Exam Part I. Part I of the FRM Exam has 100 multiple-choice questions. All the questions have equal marks against them. The topics that are covered include the foundations of risk management, quantitative analysis, financial markets and products, and valuation and risk models. One has to keep up the level of dedication, determination, and hard work in order to pass Part I of the exam. In the period of 2010–2017, the average pass rate, in Part I have of the exam was 46%. So, you are required to plan accordingly. Moreover, it is suggested that one should spend on an average of from 200 to 240 hours in preparing and studying for Part I of the exam. The GARP, however, says that the average time of study is 275 hours. There are students who dedicate even 400 hours to the preparation. The results get notified in the GARP candidate portal, so in case, you qualify, you will get one such notification.

Step 3: Registration for Part II of the Exam

The GARP provides up to four years to register for the Part II of the exam. This is done after one gets a notification about the passing of Part I of the exam. 

Step 4: Pass FRM® Exam Part II

The Part II of the exam consists of 80 questions. All of the questions have equal weightage. The topics that are covered mostly include market risk measurement and management, operational risk and resiliency, credit risk measurement and management, liquidity and treasury risk measurement and management. In the year 2010–2017, the average pass rate, for Part II of the exam was 57%. So, it can be concluded that Part II also requires the same amount of dedication and determination, as like as Part I. Hence, you can prepare accordingly. However, it is suggested that you should dedicate 240 hours for the purpose of preparation.

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Step 5: Get Two Years of Experience

In order to get the Certified FRM, you are required to have at least two years of full-time work experience in the field of risk. It is important to note that the Finance-related vocations are the only ones considered as acceptable work experience, for instance, portfolio management, industry research, trading, and risk consulting.
To submit this experience, you are required to explain your professional role in financial risk management in at least five sentences and submit it to GARP. This has to be done within five years of passing Part II of the FRM Exam. After you submit your description, GARP will confirm that you are a Certified FRM holder and have been included in its registry.