FINANCIAL RISK MANAGEMENT [FRM]

All You Want To Know About FRM

  • The Financial Risk Manager (FRM®) designation is offered by the Global Association of Risk Professionals (GARP) and is the globally recognized standard for those who manage risk. Certified FRMs are part of an elite, global network, and are valued by top employers across diverse businesses.
  • Requiring the successful completion of a rigorous two-part, practice-oriented examination, the Financial Risk Manager (FRM) designation provides a bedrock foundation in a profession and industry that is rapidly evolving. Since the FRM Program’s inception in 1997, Certified FRMs have achieved positions such as Chief Risk Officer, Senior Risk Analyst, Head of Operational Risk, and Director of Investment Risk Management, to name a few.
  • The global FRM community is growing dramatically, with Certified FRMs represented at nearly every major banking institution, government regulator, consulting firm and financial services institution around the world.

 Who is it for ?

Working in finance and wants to climb up the success ladder

Willing to switch career to finance but doesn’t know where to start

A Student who has a plethora of options to choose from

Develop your expertise in Risk Management domain. FRM Charter holders are highly respected in the industry and most importantly paid well.
So essentially we are saying all your risks are kind of hedged!

We encounter many IT/Operations professionals pursuing careers in Risk Management. FRM certifications will help understand the client requirements better, help you move towards functional side and you’d get to do some “real” work. Again, additional perk is $$$!

FRM exams eligibility criterion doesn’t require completed Graduation. Which means you can start early and build an amazing CV and get ready for the Finance World

About The FRM Program

  • Globally recognized.
  • No educational or professional qualifications needed to register. Which means anyone can take the exams irrespective of Education background. Even if you have just finished your school!
  • (FinTree Tip: FRM program does require some intensive calculations and therefore unsaid eligibility is being “okay” with maths. You don’t need to be a geek, you don’t strictly need to know calculus, but you need to be reasonably “okay” with maths)
  • Organized into two parts, each a four-hour exam.

Exam Requirements for FRM Certification

  • Pass the FRM Exam Part I
  • Pass the FRM Exam Part II within 4 years of passing Part I
  • Demonstrate 2 years of professional full-time financial risk management work experience

A candidate demonstrates work experience by submitting a minimum of 4-5 sentences describing his/her professional role in the management of financial risk. The application to submit your work experience must be completed in “My Programs” within your account. The work experience submitted cannot be more than 10 years prior to having passed the FRM Exam Part II. The designation is geared toward practitioners, academic teaching and research in areas relevant to financial risk management can be considered as relevant work experience. Experience completed during school will not be considered, including internships, part-time jobs, or student teaching. A candidate has 5 years to submit his/her work experience after they sat and passed the FRM Exam Part II. If he/she does not, the candidate will have to re-enroll in the program and pay the required fees and retake the FRM Exam Part I and FRM Exam Part II.

Candidates cannot use the FRM designation after their name in any manner until they have been certified.

How much time do I have to complete the FRM Certification process?

Once a candidate passes the FRM Exam Part I, he/she must then pass the FRM Exam Part II within 4 years. Candidates have 5 years from the date they sat and passed the FRM Exam Part II to have their work experience verified.

What does the FRM Exam Part I cover?

The FRM Exam Part I focuses on the tools used to assess financial risk. They include:

  • Foundations of risk management concepts
  • Quantitative analysis
  • Financial markets and products
  • Valuation and risk models

What does the FRM Exam Part II cover?

The FRM Exam Part II focuses on the application of the tools acquired in the FRM Exam Part I. They include:

  • Market risk measurement and management
  • Credit risk measurement and management
  • Operational and integrated risk management
  • Liquidity and Treasury Risk Measurement and Management
  • Risk management and investment management
  • Current issues in financial markets

What qualifications do I need to register for the FRM Program?

There are no educational or professional prerequisites needed to register.

What is the Exam format?

The FRM exam consists of two parts, Part I and Part II, which are both typically offered twice a year on the third Saturday of May and the third Saturday of November. Part I is an equally-weighted 100 question multiple-choice Exam offered in the morning of the Exam day, and Part II is an equally weighted 80 question multiple-choice Exam offered in the afternoon of the Exam day. Both Exams are administered in a paper and pencil format.

Part I and Part II each have a maximum allowable time for completion of four hours. It is important to note that Part I and Part II must be passed sequentially. Therefore, while it is possible to sit for both parts of the Exam on the same day, you must receive a passing score on Part I of the Exam before GARP will score your Part II Exam. Most candidates elect to take Part I and Part II on separate Exam administrations.

You should also be aware that the Exams are offered in English only; specifically American English. GARP is aware that not every candidate’s native language is American English. In the exam development process, GARP makes every effort to ensure that questions are written in a clear, concise form and avoids the use of colloquialisms or other terms and phrases that might confuse a non-native American English speaker.

Another consideration for potential candidates is the quantitative aspect of the subject matter. The level of mathematical difficulty of the Exam is consistent with an advanced undergraduate or introductory graduate level finance course at most universities. It should also be noted that while the FRM Exam is conceptual in nature, you will still need to know important formulas and calculations and how to apply them correctly. Formula sheets are not provided with the Exam. For guidance on which formulas to focus on, please refer to the Learning Objectives and look for any statements that include the words ‘calculate,’ ‘compute’ or ‘derive.’ These words will generally indicate an associated formula to commit to memory.

Z-Table Information

A standard table presenting the values for the cumulative distribution function (CDF) of the standard normal distribution (“z-table”) is provided, as is other relevant information pertaining to the CDFs of other probably distributions (F, chi-square, etc.) where necessary and applicable. Memorization of CDF values is therefore not expected. A list of common abbreviations used throughout the Exam is also provided.

What happens if the Exam site is closed or must be moved?

GARP may determine it is necessary to close an Exam site due to an evacuation, natural disaster, acts of military, political or government authority, or "Acts of God". Should such a cancellation occur, GARP will make every effort to notify candidates as soon as possible.

If we have to change or cancel the Exam at a particular site for any other reasons, GARP will make every effort to provide advance notice and inform the candidates of the new Exam site and/or additional options.

When is the deadline to pay for the FRM Exam?

In order for your Exam registration to be considered complete, payment must be received by GARP no later than midnight (New York time) on the closing date of each registration period.

May Administration Exam Deadlines

Due to concerns surrounding the COVID-19 pandemic, the May 2020 exam has been postponed to October 2020.

Dates

Description

Sunday, December 01, 2019

Registration Opens

Wednesday, April 15, 2020

Registration for October 2020 closes

Thursday, October 01, 2020

Admission Tickets released

Saturday, October 24, 2020

Exam Day

Sunday, November 29, 2020

Exam results sent via email

 

**Request for alternative exam date for religious reasons only

November Administration Exam Deadlines

DATES

DESCRIPTION

Friday, May 01, 2020

Registration Opens

Friday, July 31, 2020

Early Registration Ends

Monday, August 31, 2020

Standard Registration Ends

 

ADA applications must be received

 

RAD applications must be received**

Thursday, October 15, 2020

Registration closes

 

Last day to defer to the next Exam

Sunday, November 01, 2020

Admission Tickets released

Saturday, November 21, 2020

Exam Day

Friday, January 01, 2021

Exam results sent via email

 

**Request for alternative exam date for religious reasons only

 

Registration Fees in USD

Exam

Enrollment

Early

Standard

Late

FRM Exam Part I*

 

$400

 

$425

 

$550


 $725

 

FRM Exam Part II 

 

N/A


 $350

 

 

$475


 $650

 

* FRM Part I eBooks are included as part of exam registration

Payment Options

For any manual payments by check or wire there is a US$50 processing fee that will be added to your invoice. Be sure to include your GARP ID, a copy of your invoice, and your signature for approval.

Candidates can pay for their Exam registration via the following options:

  • Credit Card Online - GARP accepts MasterCard Visa, or Amex Check
  • Check - Must be a US bank check or a foreign check with a US intermediate bank Wire 
  • Wire - Wire instructions can be found on the bottom of your invoice
  • Please mail your invoice and/or payment information to the following address:
  • Attn: Exam Administration
    Global Association of Risk Professionals
    111 Town Square Place, 14th floor
    Jersey City, NJ 07310 USA
  • Make your check payable to: Global Association of Risk Professionals
    Note: Only single payments per candidate registration are accepted online. Should a candidate be paying for more than one candidate using any of the above options, please contact us directly at memberservices@garp.com to help you with your multiple registrations.

Can I get a refund?

GARP does not provide refunds.

Can I transfer my Exam registration to another candidate?

No. Candidates cannot transfer a registration to another candidate.

Are study materials included in the price of the Exam registration?

FRM Part I eBooks are included as part of exam registration (candidates will receive an email explaining eBook access after registering).

FRM Part I print books can be purchased on the garp.org website. 
FRM Part II books are not included with registration, but FRM Part II print or eBooks can be purchased on the garp.org website 

GARP has also prepared several materials in order to further assist you in successfully preparing for the FRM Exams, available for free digital download:

  • Practice Exams (free for those registered for the exam)
  • Learning Objectives
  • Study Guide
  • Changes to the Study Guide from the year prior
  • 18-Weekly Study Plan (Study Modules)

Should I create a study plan?

Due to the sizable amount of material covered in the Exam, we suggest that candidates   create a weekly study schedule. As such, we have created a 15-Week Study Plan that candidates should use as a framework and customize the plan based on their level of expertise. This is designed to pace the learning materials over an extended period of time.

How many hours are required to prepare for the FRM Exam?

Candidates’ preparation times will vary based on their professional experience, academic background, and familiarity with the concepts tested on the curriculum.

On average, individuals devoted approximately 240 hours to Exam preparation according to a survey conducted in May 2015 FRM Exam Part I candidates. Individual figures, however, varied from less than 100 hours (10%) to more than 400 hours (14%).

 

Does GARP offer any scholarship programs?

Students and faculty in GARP Academic Partner programs have exclusive access to scholarships, which cover the FRM or ERP Part I Exam registration fee. Up to six students and one faculty recipient may be nominated by the program administrators each year. For more information please contact Academic Partners page.

 

Exam Preparation Providers:-

While GARP does not conduct exam preparation courses, there are third party firms that do provide such services. Please check the GARP website for the most recent list.

It should be noted that GARP does not endorse, promote, review, or warrant the accuracy, products, or services offered by Exam Preparation Providers of Exam related information. Nor does it endorse pass rates claimed by an Exam Preparation Provider. Further, GARP is not responsible for any fees or costs paid by the user to an Exam Preparation Provider. GARP provides candidates with this information solely as a service to them.

 Academic Offerings:-

Another component of GARP's risk education offerings includes partnerships with various colleges and universities to craft programs that offer rigorous academic instruction aligned with the FRM curriculum. Students who matriculate in such programs can be better prepared to succeed in the challenging field of risk management. More detailed information about GARP's academic partners and the programs they offer can be found on the GARP website.

Hope you can find this article helpful. If you did like this Blog then Share it with your friends who are preparing for FRM Exams or who will be giving their FRM Exams in the near future. 

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1 comment

  • Sai

    Excellent overview of the topic

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