Posted By: Kaplan Schweser
Updated: April 3, 2020
If you are considering sitting for the FRM® Exam, you probably have questions. We’ve created this article to answer the most common questions we receive from people who are taking their first steps toward the FRM designation. You’re always welcome to reach out to Schweser’s knowledgeable Student Support team for help as well.
FRM is an acronym for Financial Risk Manager. Offered by the Global Association of Risk Professionals (GARP), the FRM certification is recognized as the leading certification for risk managers. Those with the FRM designation are in high demand because of their demonstrated ability to anticipate, respond, and adapt to critical risk issues. The FRM designation lets banks and financial firms know that you take risk management seriously, and your knowledge has been validated by international professional standards.
The FRM designation is valued by top employers and recognized globally as the highest standard of achievement in financial risk. As the FRM designation continues to grow, so do its benefits. According to Glassdoor, the average annual salary for financial risk managers in the United States is $101,404. Financial risk analysts earn approximately $56,000. On the top end of the scale are senior financial risk managers or executives, who earn an average of $151,000.
To earn the certification, you must take and pass Part I and Part II of the FRM Exam. There are no education or work requirements for taking the exam, but after you pass both parts, you must demonstrate 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.
The FRM Exam Part I focuses on the tools used to assess financial risk, and it is always offered in the morning. It has more questions than Part II. Part II focuses on the application of the tools, and it is always offered in the afternoon.
Both Part I and Part II are offered in May and November. However, due to the COVID-19 pandemic, the May 2020 FRM exam has been postponed to October 24, 2020. You can take both levels on the same day; however, you will not be scored for Part II if you don’t pass Part I.
Part I and Part II of the FRM Exam are paper-and-pencil, multiple-choice exams; each part is four hours in length. Part I has 100 multiple-choice questions, and Part II has 80.
Part I tests your knowledge of the tools used for risk management. The topics and their weights are:
The topics of Part II are based on applying the tools tested in Part I and are weighted as follows:
For each part, you need to study a minimum of 200–240 hours, and you should start studying as soon as you’ve registered. You will be tested on your ability to read a question, analyze it, and apply concepts to it. So cramming in the final weeks before the exam won’t help you. The topics require a type of knowledge that can only be gained over a structured, careful course of study—not last-minute, frantic reviews of core materials. You can learn more about how to study for the exam here.
The FRM Exam is very quantitative, and the curriculum takes a lot of time to master. As a result, more people fail Part I than pass it, and barely half of those who take Part II pass it. One reason for this is the variations in the FRM Exam questions. Some are straightforward, others appear straightforward but have a trick to them, and the wording of still others can be confusing. Therefore, there will undoubtedly be questions on the FRM Exam that give you trouble (you can learn how to tackle those here.) Some self-directed and motivated candidates are able to pass both parts of the FRM Exam using a course of self-study, but many use exam prep packages or classes to stay organized and ensure they are prepared for exam day.
The FRM Exam pass rate is on the decline overall, especially for Part I. Of those who took the exam in 2017, the average pass rate for Part I was 42%, and 53% for Part II. The May 2018 pass rate was 41% for Part I, and 53% for Part II. You can greatly improve your odds of success by learning from other candidates’ experiences and avoiding common study mistakes.
The cost to sit for the FRM Exam varies depending on when you register. Enrollment for the FRM Exam requires a one-time enrollment fee of $400 (USD), due when you register for your first Part I FRM Exam, as well as individual exam registration fees, listed here: