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FRM vs MBA: The Top 20 Differences

Estimated reading time: 11 minutes

 

Differences you must know about this debate

The FRM vs MBA debate has been on the minds of many students and has been discussed exhaustively over the years.

In this article, we seek to shed some light on this hot topic and hopefully clear up any misconceptions that you may have about these two great educational options.

 

Preface

Today’s work environment can be a little intimidating, owing to the vast number of MBA graduates and professionally certified individuals in various fields. These people often come across as sharp and highly skilled.

In the field of finance, MBA and FRM remain among the most sought after qualifications by employers around the world.

Both programs have the potential to propel your career to higher heights, but it is always an unfortunate dilemma when an individual has to decide between these two. Read on to find out which to choose between the two.

 

What is the FRM course about?

The Financial Risk Manager certification is the worldwide qualification standard for risk managers. The program is provided by the Global Association of Risk Professionals based in the United States.

The program entails two parts or levels- both of which sharpen candidates, readying them for the dynamic nature of risk conditions in the global economy.

After passing level 1 and level 2, candidates will need two years of experience in a risk related field to receive the certification.

The experience can be from fronts such as academia, risk management, investment, trading, equity research, auditing, economics and portfolio management, among others.

 

What is an MBA about?

The Masters of Business Administration is a post graduate degree that typically gets you ready for management roles in business.

There are many schools that typically offer a two-year MBA course, some in a time-frame that’s even shorter than that.

Having an MBA sharpens your preparedness for management strategy and analysis and furnishes you with knowledge on finance, accounting, leadership and marketing.

In today’s world, you can study for an MBA part time, full time or even online.

 

What is the significance of FRM?

Signing up for the Financial Risk Manager program is an alternative to many graduate degrees in the financial world. Unsurprisingly, the market is far less saturated with certified FRMs as it is with MBA holders.

As a result, with FRM certification, there is a promise for higher earnings, senior roles, and more job responsibilities after completion.

Unlike an MBA program, the FRM course is not holistic, but laser-focused on risk management in the financial world.

FRM professionals play a unique role in analyzing, assessing, and creating risk contingency plans to prevent losses and add value to organizations.

The course is detailed, practical and takes a global perspective on the risk issues of today.

 

What is the significance of an MBA?

In the FRM vs MBA argument, having an MBA is also a qualification you can seek to advance your career. Unlike the FRM course, an MBA is more holistic and not limited to risk management in the financial sector.

The typical MBA syllabus is incredibly comprehensive, covering many areas and preparing students for various aspects of business management. 

An MBA equips students with the knowledge and necessary competencies in all the areas of modern business operations.

Whereas the FRM program focuses students to the areas of risk, an MBA makes you attractive to all kinds of employers.

 

Who are the top employers?

Your potential employer is another big consideration in the whole debate.

After FRM certification, you can find employment in the finance sector such as central & commercial banks, portfolio management firms, investment banking firms and hedge funds, among others.

On the other hand, after MBA accreditation, you can expect to find well-compensating employment in similar sectors dealing in banking and portfolio management, accounting and corporate finance.

Additionally, apart from the financial industry, MBAs have found work places in marketing, medical health services, IT management and business operations management, to name a few.

 

Course differences

GARP’s FRM program entails passing two challenging examination levels that will probably set you back 300 hours in study time.

To attain the globally acclaimed accreditation, one has to read nine books and go through other revision materials.

Nevertheless, even though the program is rigorous and involving, it is possible for students to juggle work family and the studies.

The FRM program gives you access to tutorials and webinars. The syllabus is meticulously crafted by GARP and receives regular updates in line with trends in the financial world.

The MBA course, on the other hand, is another internationally recognized post-graduate degree in business.

The MBA curriculum entails foundation courses for students without a business background, core classes that equip students with skills in accounting, business strategy, economics and finance.

This course also entails soft skills such as communication and leadership. The other part of the MBA program is elective classes where students get to specialize in one area of interest for their career.

The typical MBA program entails an involving coursework path, assignments and fieldwork endeavors that often leave little time for work and social life.

 

Course topics for the MBA program

MBA courses equip students with essential business skills and knowledge for success in a hybrid economic environment.

In a typical MBA program, you will have a mix of core courses and elective classes. Each institution often has different MBA subjects, touching on different academic fields.

Nonetheless, some courses are typical and fundamental to any MBA program. These may include:

  • Finance
  • Marketing
  • Data Analytics
  • Strategy
  • Ethics
  • Accounting
  • Economics
  • Leadership Communication
  • Organizational Behavior
  • Entrepreneurship

 

Course topics for the FRM program

Unlike an MBA, the FRM syllabus is more consistent and offered by one governing institution; The Global Association of Risk Professionals, GARP.

Even though you can source tutorials, lectures and study materials from third party providers, the FRM course syllabus is crafted and steered by GARP.

The Financial Risk Manager program entails two levels, each tackling different areas of risk management. 

Part 1 has four segments, while Part 2 covers six segments.

 

Part 1 Topics

  • Quantitative Analysis
  • Foundations of Risk Management
  • Valuation & Risk Models
  • Financial Markets & Products

 

Part 2 Topics

  • Credit Risk Measurement & Management
  • Market Risk Measurement & Management
  • Liquidity and Treasury Risk Measurement
  • Risk Management & Investment Management
  • Operational Risk & Resiliency
  • Current Issues in the Financial Markets

 

Of interest, GARP lays out the learning objectives for each reading in the risk management path.

Because there is no official classroom training for this course, students can take advantage of the learning objectives to organize their studies.

 

What are the FRM course enrollment requirements?

GARP does not require any specific educational history or work experience for enrollment into the FRM course. The program is designed to cover all the theory and practical approaches to risk management in the financial world.

It is noted however, that after passing the level 1 and level 2 exams, you will need to gain experience in a risk related position to receive your certification.

 

What are the MBA course enrollment requirements?

Business school students typically need a degree to enroll in an MBA program. It is normally the bare minimum admission requirement, even though some institutions consider extensive work experience as an alternative for the degree.

Of interest, candidates with a bachelor degree in a business field such as accounting or economics stand to have an easier time towards MBA success compared to students with majors in other disciplines.

Be that as it may, the concentrations of MBA are not necessarily in the financial world. For instance, hospital administrators pursuing an MBA will find their healthcare major to be a significant asset.

In summary, the typical admission requirements for an MBA are:

  • A bachelor’s degree from an accredited institution
  • A minimum of 2 years of work experience
  • Resume and personal statement
  • Professional letters of recommendation
  • Proof of English proficiency (Depending on institution)

 

Course duration

One strong consideration in this  debate always surrounds time-to-completion.

For the FRM course, one can complete the examinations in less than 1 year. However, the typical MBA program requires two years (sometimes even longer), but there are accelerated versions of it as well.

In both these programs, the duration depends on your work and family engagements, and how quickly you successfully pass each exam and projects (specifically in the part of MBA).

 

What do FRM exams entail?

GARP’s FRM demands students to invest a considerable amount of time in their studies. Both exams are comprehensive, always rated as ‘tough’ by past students and industry experts.

That’s probably the reason why the pass mark for each of the exams is found in the 40 percentile.

Both examinations involve multiple choice questions, administered in English. The exams are held two times per year – in May and November.

Each exam takes four hours. Level 1 has 100 questions, while level 2 has 80 questions. Level 1 is held in the morning, while level 2 is taken in the afternoon.

There is a high level of difficulty to be expected because the exams aim to create expertly skilled risk professionals who can handle demanding risk scenarios.

Of interest, the results are either ‘Pass’ or ‘Fail’ and there is no wrong marking for incorrect answers. You will get results through email approximately six weeks after the sitting.

 

What do MBA projects entail?

Just like other postgraduate programs, the MBA program involves multiple projects and assignments after each topical area.

In addition, there is also an extended project submission (your dissertation) that concludes the program.

This program, however, is more practical than in any other postgraduate degree. You will be required to work and conduct research in the real world to earn the necessary credits.

Furthermore, you will be required to write and reflect on your final project. Here, your skills in meeting objectives in the real business world are what counts for credits and advancement.

 

What are the costs?

The FRM program demands new students to pay $400 for regular enrollment plus individual exam fees. Early exam registration for new students is $425 while the standard cost is $550 and late registration is $725.

There are also books that students have to buy from GARP, plus supplementary course materials from third party providers.

The typical MBA is far costlier. This is so, as your MBA program will entail classroom training stretched over a longer time period.

The cost varies among different institutions, however, the typical tuition fee for a two-year MBA program is normally more than $60,000.

Top businesses schools might charge as much as $100,000 or more. The more prominent the institution is, the more valuable your MBA will be.

This is unlike the Financial Risk Manager course, where GARP is the only provider of the program and its content requirements are the same globally.

 

What salaries can you expect?

Many professionals in the financial sector will pursue FRM for its earning potential and exclusivity crown. The average salary for a risk professional is between $80,000 and $200,000 in the US.

These figures will vary depending on your work experience, job position and location.

On the other hand and similar to the FRM program, the reason why many students are willing to spend thousands of dollars to attain an MBA title is because of its promise of a higher earning potential.

The starting salary for an MBA graduate is approximately $100,000 in the US.

Additionally, there are other fringe benefits to consider as well. And, similar to other qualifications, compensation will be dependent on years of experience, position and location.

 

What are common job positions?

Although certification is narrower in scope, it converts candidates into financial risk geniuses. Ever since the financial crisis that shook the world in 2008 and 2009, risk management and value creation are top considerations in the minds of many global employers.

FRM job positions may include:

  • Chief Risk Officer
  • Risk Management Consultant 
  • Corporate Risk Director
  • Regulatory Risk Analyst
  • Head of Operational Risk
  • Credit Risk Specialist
  • Investment Risk Manager     
  • Senior Risk Analyst

MBA graduates are also high in demand and statistics show that over 65% of financial employers are in need of MBA graduates. MBA job positions are cross-cutting in all sectors of the economy.

These may include:

  • Investment Banker
  • Investment Fund manager
  • Financial Manager
  • Accounting Director
  • Information Technology director
  • Chief Technology Director
  • Health Services Manager

 

Competing certifications

Both programs have alternatives. For risk management, you can attain similar skills from the Professional Risk Manager (PRM) exam. The only difference is its international recognition.

For the MBA, you can alternatively pursue a Masters in Management among many other postgraduate courses.

 

Why not both?

If you already have an MBA, nothing can stop you from getting FRM certified. The reverse is also true. You will have even better professional prospects with these two qualifications.

However, it is understood that because of time and monetary constraints, students often have to choose between one of these two courses or, at least, prioritize one before another.

 

The bottom line

The FRM curriculum is highly specialized in the areas of risk management. The MBA program is an all-encompassing program that improves your business acumen in several sectors of the economy.

Risk certification is beneficial to professionals that need to increase their competencies and value in banks, insurance companies and pension funds, among other areas in finance.

MBAs can find work in the energy sector, the health sector, finance, technology, and manufacturing, among others.

Both programs are valuable courses, but if you need a less expensive and shorter route to higher earning potential in the financial sector, FRM remains a great choice.

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