Financial Risk Management and FRM Certification

Estimated reading time: 9 minutes



The landscape of risk management is advancing and evolving rapidly. Every news headline today is a reminder of a future that’s inevitable, and it feels like new skills and knowledge in risk management are in high demand.

Financial risk managers have to be apt in identifying new opportunities and dealing with the unique challenges that come along the way. This program can help managers stay prepared for an uncertain future.

The program’s curriculum takes into account the trends that are shaping the economic environment and helps risk professionals stay relevant.


Professional certifications carry more weight

The relative rate of enrollment in graduate and post graduate level courses is on a steady decline for both online and on-campus courses. Experts predict that this trend will persist and possibly accelerate. 

The driving factor is the vast amount of the debt that graduates are laboring under, which is said to total approximately $1.5 trillion.

What employers currently need in the form of continued education is soft skills and laser-focused industry skills that generalist graduate courses simply do not provide.

In that regard, professional certifications now carry more weight with employers.

Certification by GARP®, for instance, is now seen as the global qualification standard for all risk managers. The certification courses are favored for their relevance and the industry-focused knowledge that they impart.


Employers are nurturing competencies for future needs

The future well-being of any business depends on the leaders that sit at the helm of the company.

Pragmatic employers like to see the bigger picture and they target persons that can fulfill the future leadership needs of their business. 

The criteria to fit into that target list include excellent communication, problem-solving skills and people skills, among others.

The FRM program by GARP® sharpens your critical thinking and decisions making skills. These are two ingredients that will make you a hot choice for leadership roles.

On top of that, your leadership is enhanced by the visibility and clear communication skills that you gain from participating in the vast network of professionals.


Creating an intelligent culture of awareness

One of the evolving trends is that organizations now realize just how vast the scope of risk is and the role that everyone plays in it.

To create a strong sense of awareness, organizations are leveraging analytics and identifying employees who are in first contact with uncertainty.

What follows next is training employees on how to foresee, manage and mitigate it.

Specialists have a vital role to play in communicating the role and effects of risk. You will be in charge of organizing training sessions and simplifying complex scenarios for everyone to understand.

In light of that, employers now see the need to employ risk professionals with the right communications skills, negotiation skills and additional soft skills.

After your certification and taking part in the network sessions, you will be the right match for these company needs.


New changes in the ownership

Before the 2008/9  global crisis, the job of risk detection and control fell on the supervisors and line managers. 

Today, companies don’t want to be caught off guarded again, and are therefore expanding management responsibilities up the chain of command.

Middle and senior level managers now need to have the right skills for the job to steer the company into a better future.

Senior level managers now have to demonstrate that they are passionate in advancing their skills and knowledge in the field of risk management. 

In such a position, you will be directly involved in influencing related decisions and strategizing for the future, as opposed to treating operational risks.

Having the globally renowned certificate and being part of the fraternity is something that will be highly beneficial in this case.

As the top level management takes an active approach in strategizing and implementing measurement frameworks, the first line of defense is dependent upon understanding and managing risk.

Highly trained professionals in supervisory positions now help to turn risk management from a defensive effort to a proactive engagement.


More budget cuts in compliance departments

According to a study by Accenture, 71% of financial institutions are reducing their compliance department budgets.

Risk professionals, therefore, need to be adaptable to this change and find ways to rejigger their operating models to work with limited resources.

Resource allocation is one of the principles of management in GARP’s program. The course also aims to expose candidates to realities such as these through case studies.

Even so, if budget cuts strangle compliance programs and operations, you will need to communicate that to the senior leadership or corporate board.


Business growth sets the pace

While managers continually have to address regulatory concerns, the biggest driver of change in compliance is responsiveness to an organization’s growth needs.

FRMs have to be highly alert in every new opportunity the company explores, including mergers and acquisitions. 

Companies are also rushing into block chain solutions, A.I and other investments and automation that bring in new forms of risk and compliance challenges.

Certified individuals are equipped with the latest industry knowledge and are trained to be adaptable to these dynamics.


Vigilance and resilience now outplay avoidance strategies

While preventive approaches have been the strategy in the past, businesses are shifting focus onto diligence (ability to foresee scenarios) and resilience (ability to quickly neutralize threats).

Prevention as a strategy only yields small benefits with side effects that slow growth. On the other hand, monitoring of, regulations, business anomalies and setting contingency plans proves to be far more beneficial.

This trend stems from the growing realization that it is impossible for a business to be better off altogether. The Financial Risk Manager program by GARP turns risk professionals into valuable assets in any organization. 

With skills in risk measurement, evaluation, and management, certified FRMs are equipped to handle such new approaches to risk.

An expert can assess, prioritize and determine the right course of action in vigilance and resilience.


Innovation leads to regulation

Regulation in the world is dynamic too, but not as rapid as technological innovations.

Businesses are now exploring high-risk innovations even when they currently fall outside the scope of existing regulations. These changes later drive the regulation agenda.

The main force behind this trend is the ubiquitous proliferation of innovations. Businesses are forced to adopt new models that also spill over to risk exposure.

The right specialist, therefore, is not the one that aims to keep a business compliant, but one that helps a business grow despite regulations.


Regulations are becoming blurred in the face of innovations

There is some restraint on the part of industry regulators in order to allow innovation to grow. This trend has some significant threats and opportunities as well.

Businesses are taking advantage of that to reduce regulatory risks and install self-regulatory frameworks. 

On the other hand, exploring a project that lies outside the scope of current regulations can lead to losses when current grey areas become prohibited.

Only highly trained experts can keep businesses in the clear.


A performance enabler

Risk has become more tangible and measurable, and thus, organizations can now evaluate the upside value of risks. And let’s not forget, many organizations actually look for value opportunities in risk. 

Unlike in the past, where risk management was an endeavor focused on avoidance and stringent compliance, business leaders today encourage some level of risk to stimulate growth.

The ever-balancing task can be precarious for mangers that don’t have updated knowledge of risk management. In light of that, most employers are moving certified professionals up to middle and senior leadership levels.


Risk Management is now part of other business processes

Many businesses are now integrating risk management into larger business processes. Companies now see the value of having multiple data sources to predict, monitor and manage risk. 

Technological advancements have turned risk management from a single business process to a holistic undertaking, thanks to the new ways of sharing and interpreting data.

Today, managers have to be adept at working with advanced risk management tools in various functions and departments.

It would help to be tech-savvy, to know how to mine data and gain insight from multiple fronts to streamline the process of risk management.

This program equips candidates with new skills, plus an ability to look at risk from a broader perspective as opposed to treating each scenario in isolation.


A different global economic environment

Corporate boards across various industries are always concerned about the global state of risk. 

The changes in politics, technology and regulations have now made the business environment more challenging than what it was before.

Companies are now investing more in evaluation, prediction and mitigation efforts. Risk management experts are in high demand to oversee risk processes and help businesses navigate the current conditions.

These professionals now are required to scrutinize business approaches and proactively address all emerging risks. Management has morphed from casual reactive exercise to an enduring and future focused endeavor.


Risk has become interconnected

Across the world, business networks, economies and markets have become so interconnected that one event can have far reaching impacts.

The unsteady political environment in various parts of the world, migrant crises and trade tariffs usually has consequences that transcend local boundaries. On the other hand, no single nature of risk is isolated.

For instance, compliance issues are not just about compliance but can lead to other issues as well. Specialists, therefore, need to understand the inter-connective nature of threats to build the required resilience.

The certification course is extremely beneficial for professionals looking to gain a comprehensive and global perspective of risk management.


Operational management has broadened

Today, analysts have to deal with varied cases from money laundering, data breaches to cyber-attacks.

This component now functions like enterprise risk management, encompassing IT assets, fraud and technological disruption.

Operational specialists, therefore, need the right training and latest knowledge in integrating all these risks in one management framework.

And applying evaluation, measurement and mitigation techniques to safeguard organizations on all fronts are absolutely critical.

Such knowledge and skills fall under the objectives of GARP’s program.


Tailored approaches

As an  expert, your role is creating approaches that are tailored to your organization and not the other way round.

This involves picking the right management tools that fit your business and defining your risks from a business angle as opposed to only an industry perspective.

By creating tight-knit yet flexible models, everyone in the company will have a clear picture and understand the relevance of risk and how they impact business goals and regulations.

This certification equips current and future leaders with the cutting edge skills necessary to adapt and create consistent approaches. These are the individuals that will ultimately add the most value to businesses.


Data driven approaches

In the past, executives viewed risk as something they could do impulsively as a part of their responsibilities. They considered general risk and opportunities when strategizing and making decisions. 

However, change is inevitable, and currently, even the most alert managers will not be informed about every aspect in the business. Big data is the only way to create the right models and create strategic opportunities.

This new culture requires managers that have up to date knowledge and skills in risk management. Are you one of these professionals?


So, what does it all mean?

As the nature of risk evolves due to technology, politics and global economic changes, so does the profession. 

Without updating your knowledge in financial risk management, you might expose your company to risk or stunt your career.

The FRM certification course by the Global Association of Risk Professionals is an amazing option for budding specialists to advance their careers and bolster their preparedness for these and other future trends.

Again, we thank you for reading our article and please be sure to view our other insightful pieces and download our free content.


Stay strong and keep studying,

The QuestionBank Family