What Qualities Are Required to Become a Successful Financial Risk Manager (FRM®)?

By: Edward Roebuck
January 14, 2021
Visual representation of the qualities required to make a successful financial risk manager

Passing the exam and obtaining the FRM® designation to become fully certified is essential for anyone hoping to become a financial risk manager. However, like any profession, in order to develop into a truly successful FRM, it will take time, experience, and a lot of work. There are certain qualities that you may already possess or should aim to develop and improve before, during, and after working towards the FRM designation to increase your chance of success.

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Financial Acumen

It should go without saying that strong financial knowledge is required. For positions such as quantitative risk managers, firms will look for applicants with PhDs in statistics and physics, for example. The very top finance businesses will seek those with MBAs and doctorates firmly in the financial and economic fields.

Experience working with numbers in a variety of situations, from CFD trading to translating objective concepts into measurable items, will be of benefit. Some people are naturally gifted at working with numbers, while others have to work at it more. Whichever of these is you, pursuing financial education is vital for a career in risk management.

An Analytical and Strategic Mind

Working with high levels of data requires a financial risk manager with an analytical mind and a great eye for detail. The ability to not only gather such information but also be able to interpret it, spot risks and opportunities, and apply appropriate processes is required.

This analytical mind needs to be forward-thinking and strategic, as to manage any kind of financial risk, you need to spot it before it occurs. For financial risk managers who wish to really push on and work their way to the top, being able to apply an analytical approach over a range of clients and the bigger picture of the whole firm will boost your chances of working toward this.

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Technological Capabilities

As technology continues to advance, so too do the tools used in financial risk management, from Value at Risk (VaR) to Risk Scenario tools. Beyond just being able to use these tools, it’s important to stay up-to-date with the industry and adapt to best practices for using the latest technology developed for specialized and wider financial risk management.

A background in computer science isn’t necessary, yet an interest and ability for improving processes, such as crunching big data, will prove incredibly useful. Often, a strong financial and numerical knowledge goes together with this.

Strong Communication Skills

Almost every job requires some level of communication. In the world of financial risk management, this is truer than ever. Every FRM is expected to translate complex financial risk, products, and processes into a language the front office, management, and the board can understand. For this to work well, excellent interpersonal and general communication skills are a necessity.

This links to networking, which is highly advantageous to open up new opportunities in FRM and to increase your awareness and knowledge. Communicating across many platforms, from face-to-face to social media, will play a big part in the role.

Challenge the System

Regulatory requirements have increased greatly since the global financial crisis, and it looks to develop even further in the next 10 or so years. Therefore, ensuring compliance is met, and working closely with such departments to do so, will be more important than ever.

That’s not to say simply following the rules will lead to a successful FRM career. The most successful risk managers work the best out of regulation and challenge traditional practices and methods, where appropriate. Adapting to changing situations, and putting forward new ideas and processes, could see you take advantage of untapped opportunities, so questioning and challenging the normal can be advantageous.

These qualities are what top firms look for in financial risk managers, so developing and improving these is highly advisable for a successful and rewarding career.

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