How to Become a Certified Financial Risk Manager (FRM)

If you want to further your credentials as a risk manager, move forward in your professional development, and have certain qualities you might be thinking about becoming a certified Financial Risk Manager (FRM^®).

Offered by the Global Association of Risk Professionals (GARP), the FRM^® designation lets employers know that you take risk management seriously, and your knowledge has been validated by international professional standards. In addition, you have to pass the FRM Exam, which also demonstrates your expertise.

How Do You Become a Certified FRM?

Step 1: Register to Take the FRM

Anyone can register to take the exam by visiting www.garp.org; there are no education prerequisites. There are two parts to the exam. Both Part I and Part II FRM exam windows are in May, August, and November. The cost of registering for the exam is structured into two registration periods: early and standard. It’s possible to take both parts of the exam on the same day, but if you decide to try it, note that your Part II answers will be graded only if you passed Part I.

Considering Financial Risk Management as a career? Download the free Before You Sit for the FRM Exam eBook for advice from successful FRM professionals.

Step 2: Pass FRM

Passing Part I of the exam takes dedication and commitment. Of those who took Part I between 2010–2017, the average pass rate was 46%. So, plan to spend at least 200 to 240 hours studying. GARP reports that the average time of study is 275 hours and that some candidates study up to 400 hours.

Part I of the FRM Exam has 100 equally weighted multiple-choice questions. You’ll be notified when your results are available in your GARP candidate portal.

FRM Part I Exam Topics and Weights

• Foundations of risk management - 20%

• Quantitative analysis - 20%

• Financial markets and products - 30%

• Valuation and risk models - 30%

Step 3: Register for Part II

GARP gives you up to four years to register after you receive your notification that you’ve passed Part I. Check www.garp.org for the costs and schedules, and register within the time window indicated.

Step 4: Pass FRM

Part II consists of 80 equally weighted questions. Of those who took Part II between 2010–2017, the average pass rate was 57%. Passing Part II takes the same amount of dedication and commitment as Part I, so put in your 240 or more hours of study. This will better the odds that you’ll get good news when your results are posted in your candidate portal.

FRM Part II Exam Topics and Weights

• Market risk measurement and management - 20%

• Credit risk measurement and management - 20%

• Operational risk and resiliency - 20%

• Liquidity and treasury risk measurement and management - 15%

• Risk management and investment management - 15%

• Current issues in financial markets - 10%

Step 5: Get Two Years of Experience

The final step in becoming a Certified FRM is demonstrating that you’ve had at least two years of full-time work experience in the field of risk. Finance-related vocations are the only ones considered as acceptable work experience. Examples include portfolio management, industry research, trading, and risk consulting.

To demonstrate this experience, you describe your professional role in financial risk management in at least five sentences and submit it to GARP 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.

Starting Your FRM

If you’ve decided to pursue a career as a certified FRM, a good FRM exam prep program can increase your odds of passing Part I and Part II of this challenging exam.