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, the FRM Program saw over 42,000 registrations in 2015 and has seen enrollment grow at an annual rate of 20% since 2005.Because many FRM candidates are also working professionals and the program and exams are quite intensive, it may take several years for a risk professional to earn the FRM designation.There are currently more than 32,000 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 quite difficult. According to GARP, the November 2015 pass rate for Part I was just 42% while Part II saw roughly 62% 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.

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 10 FRM Employers

  1. ICBC
  2. Bank of China
  3. HSBC
  4. Agricultural Bank of China
  5. Citigroup
  6. KPMG
  7. Deutsche Bank
  8. Credit Suisse
  9. UBS
  10. PwC

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 (32,000 v. 135,000), which in itself brings a lot of value to the credential.The costs of completing the FRM Program are lower from $1,300 to $1,900 to complete both parts of the FRM Exam on the first try. The CFA Program starts at $2,400 (minimum) to complete all three levels of the exam on the first try.

FRM Salary

In terms of compensation, FRM holders can earn anywhere between $65,000 and $150,000, 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 $110,000
Credit Risk Manager $123,000
Vice President, Risk Management $144,520

 

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