Why Become a Financial Risk Manager (FRM®)?

Why Become Financial Risk Manager?

Are you thinking about pursuing the FRM® designation? Here is some basic background on what the FRM is and what it can do for your career as well as what the FRM Exam entails.

What is the FRM® Designation?

FRM stands for Financial Risk Manager. The FRM designation is a professional certification offered by the Global Association of Risk Professionals (GARP) and it is widely recognized as the premier global certificate for financial risk professionals. Since its inception in 1997, the FRM designation has grown in popularity, with enrollment in the FRM Program surging in the years following the financial crisis of 2008. The fallout from the improper handling of market and credit risks has created a huge demand for qualified risk professionals. According to GARP, FRM Program enrollment grew at an annual rate of 15% since 2010 and surpassed 67,000 in 2018, with membership swelling to 200,000 across 190 countries. There are currently more than 50,000 certified FRMs globally.

Why Earn The FRM Designation?

In addition to broadening and strengthening your skillset, the FRM designation enables you to:

  1. Stand Out — The FRM demonstrates your strong knowledge and comprehensive of financial risk concepts and clearly sets you apart from your competition.
  2. Grow Your Network — Become part of an elite and well-connected community of highly valued and sought after professionals.
  3. Advance Your Career — With the FRM designation comes increased credibility and respect from employers, peers, and clients.

Who Should Take The FRM Exam?

The FRM examinations are difficult and most candidates are working full-time whilst studying. According to GARP, the May 2018 pass rate for Part I was just 41% while Part II saw roughly 53% pass.The FRM designation is highly specialized and makes the most sense for risk professionals or those with a deep interest in assessing managing risk on behalf of accounting firms, banks, insurance companies, consulting firms, asset management companies, and regulatory agencies.

9 out of 10 FRMs would recommend the certifiation to colleagues // More than two-thirds of FRMs believe the certifcation has benefited them

Who Are The Top FRM Employers?

Where might you land with the FRM under your belt? Based on 2015 statistics from GARP, below are the Top 10 employers of certified Financial Risk Managers, ranked by number of FRMs employed.

Top FRM Employers

ICBC // HSBC // Agricultural Bank of China //Credit Suisse // PwC // UBS // Citigroup // Bank of China // KPMG // Deutsche Bank

Which Is More Valuable, FRM or CFA?

This is an excellent question—both credentials hold great value for those professional for whom they’re suited.In general, the CFA charter is more generalist in its focus and targeted toward a broad range of financial professionals. As mentioned, the FRM designation is highly specialized and there are far fewer FRMs than CFAs in the world, which in itself brings a lot of value to the credential. The costs of completing the FRM Program are lower to complete both parts of the FRM Exam on the first try. That said, there is a real benefit to having both, which you can read about here.

FRM Salary

In terms of compensation, FRM holders can earn anywhere between $65,000 and $195,000, depending on the job role. The median salary for an FRM holder in the U.S. is $86,000. Below are some salary examples from compensation research firm PayScale.

Role Annual Salary
Risk Analyst $65,000
Senior Internal Auditor $88,437
Quantitative Analyst $115,000
Credit Risk Manager $117,000
Vice President, Risk Management $194,300

 

FRM holders are often sought-after for senior executive positions, such as Chief Risk Officer or Chief Compliance Officer, that pay remarkably well.Learn more about the FRM Program at the Global Association of Risk Professionals (GARP) website.

 

GARP