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What is the meaning of FRM? This acronym stands for Financial Risk Manager. The designation is a respected title in the world of risk and finance.
These risk professionals are in high demand globally and they command high salaries, respect and admiration from employers.
This post sheds light on why and how you can shake up a stagnating career with the FRM certification.
The Financial Risk Manager title is awarded by the Global Association of Risk Professionals (GARP®). This accreditation is given to candidates who successfully pass both levels 1 and 2 of their test.
This is the one globally recognized professional certification in the field of financial risk management.
Apart from passing the two levels, GARP requires candidates to also demonstrate two years’ experience in the field of risk and finance to qualify for the title.
After attaining certification, professionals get to join a vast network of highly qualified individuals in the financial world, including industry leaders and policymakers.
You can also take part in Continued Professional Development at your own volition.
The program covers disciplines in investment management, credit risk, market risk, and operational risk. Overall, the program sharpens a candidate’s ability to manage risk in a global financial environment that is ever changing.
About the Global Association of Risk Professionals
The Global Association of Risk Professionals was established in 1996. GARP is a not-for-profit and unaffiliated organization globally recognized as the sole membership association for financial risk managers.
GARP comprises of 150,000 members from all over the world. The body’s primary mandate is to promote the highest standards and advance the risk profession through research and education.
Working in partnership with central banks and firms in the financial industry, GARP has enabled thousands of risk professionals across the world to have a risk –awareness culture.
About the global family
In the recent past, there has been increased global recognition for this particular course. Enrollments rates are estimated to be 29% more than eight years ago.
When you attain this certification, you become part of a vast global network of highly qualified risk professionals. There are more than 150,000 certificate holders across the world.
There is a lot that happens in this massive network of global professionals. For starters, knowledge sharing and collaboration is non-stop.
You will get to fill your knowledge gap with real-world experience that will prove helpful in your career.
You will manage to stand out in your profession with up to date information on new approaches to risk, trends in regulations and industry news. That will make you a highly valuable asset in your organization.
In addition, the global network of risk professionals also organizes regular industry events. This is where industry big wigs, academics and regulators gather to discuss the future of the profession.
Taking part in such conferences will help you as an individual to have to say in the direction of the industry. Without the shadow of a doubt, networking can come in handy in job placements and career advancements.
The creation of a risk expert
Ever since the 2008/2009 financial crisis, businesses have become all the more worrisome and cautious.
There is an ever-increasing demand for financial risk managers that can add value to companies and leverage financial instruments to manage risk or turn them to opportunities.
This designation by GARP signifies an individual who is ready to handle all kinds of challenges in the financial sector.
GARP’s program trains professionals on identifying and allocating potential risks. You will also learn how to mitigate risks, make successful risk management plans and make recommendations for effective decisions regarding all risks.
Through a series of topics, case studies and tests you will learn how to prioritize risk in the financial world and how to mitigate them cost-effectively.
These skills are crucial for success and value creation in financial services firms. The high skills in assessing risks and mitigating them will make you a highly sought after individual by employers around the world.
A higher standard
GARP strives to produce risk experts that adhere to the highest standards of risk management.
After graduating and receiving accreditation, that title after your name will signify a professional that is highly knowledgeable about risk management in the business world and how they impact markets and financial institutions.
You will have top-of-the-mark skills in creating value and advancing strategic risk management objectives. Additionally, these professional adhere to the highest ethical standards.
Currently, some of the most significant risks facing firms are not financial or legally related, but unethical decisions made by their employees.
It is required to observe the highest standards of honesty and integrity to keep using the prestigious title.
They also observe the highest degree of confidentiality in all client matters. They continuously promote professional standard and best practices in the risk management profession.
Accepting the life
A daily job involves the identification and analysis of areas of risks facing an organization’s assets, investments and overall success.
As a Financial Risk Manager, you will also be responsible for forecasting industry trends and changes that are likely to have an impact on the business.
You then design and put in place strategies to manage the risks and create value.
- Personal life: Working from 9:30 am to 5:30 pm or beyond depending on the day’s workload is expected. In having the right skills in financial risk management, there will be plenty of responsibilities to handle, and even employees below you to manage. There will be little personal time with your family during the week.
- Salary: Your compensation will justify the long hours of work. You may get a handsome salary between $55,000 and $130,000 in the US. The more years of experience you have, the more you earn. There is also a wide range of allowances as part of the pay package.
- Accountability: There is pressure for producing, among deadlines related to analyses, risk management plans, compliance and policy audits among other duties and responsibilities. You are accountable for all the decisions you make, and all those made by juniors you manage.
- Professional pride: These high-achievers are well-respected in the financial industry. They are known to add the highest value to organizations, their shareholders and colleagues. The rapidly increasing demand for qualified risk experts means that many will look up to you for guidance, mentor ship and leadership.
- Learning: As a Financial Risk Manager, you will need to update your knowledge and skills continually. The job will call upon you to be a student of the news, observing markets and learning about changes in risk management and regulations.
A global achiever
Some of the highly rewarding career roles for these professionals include:
- Risk Quantification Manger
- Financial Manager
- Corporate Risk Director
- Risk Manager
- Enterprise Risk Manager
- Operational Risk Analyst
- Senior Operational Risk Manager
- Regulatory Risk Analyst
- Credit Risk Specialist
These career roles vary in intensity of responsibilities and remuneration scale. Growth prospects also differ.
Salary and growth factors mostly depend on the employer, location and candidates years of experience in the industry.
Massive employment potential
The various areas explored, including credit risk, liquidity risk and operational risks among others, are the pertinent issues in banks and financial institutions.
These companies are often on the lookout for professionals with a high skill set in risk management and the FRM endorsement is increasingly becoming the credential of choice in these situations.
Amazingly, industry employers for these high achievers include investment banks, asset management firms, government agencies, insurance companies, hedge funds and commercial banks.
Companies with the highest number of certified Financial Risk Managers include:
- Deutsche Bank
- Bank of China
- JP Morgan Chase
- Wells Fargo
The certification designates a professional that can add value to his or her organization. This achievement is a symbol of proficiency; you will have the capacity to achieve more in your career.
You will be able to approach risk management from a holistic angle and be able to interplay between the different types of risks.
One of the quickest ways to advance the corporate ladder in the financial world is to get the qualification.
Professionals with this title are often considered for managerial and leadership roles that focus on investment and risk management.
Opportunities for career advancement will also come from your expansive global network, as mentioned earlier.
Why pursue certification?
Enroll today, as the FRM certification will help you stand out in a crowded environment. This credential is the globally accepted qualification standard for risk professionals in the financial world.
You will be highly sought after by top employees in the financial sector. The title is a ticket to higher positions.
As a risk expert, you will have high skills in critical thinking and fast decision making. You will also be an expert in identifying, allocating risks and setting contingency plans.
All-in-all, you will be an indispensable asset in your organization.
After attaining the certification, professionals can always expect higher salaries in their jobs. That is because they will start to handle higher responsibilities that they didn’t before.
A note about examination dates
Level 1 and level 2 exams are held twice each year in May and November. There are more than 100 exam sites across the world. Registration for the May exam starts as early as December and ends in March.
Registration for the November exam usually begins in May, ending in September.
Historical pass rates
Between 2012 and 2016, the pass rate for level 1 averaged at 44%, whilst the pass rate for level 2 was approximately 50%. Our recommendation…use sample questions religiously.
Summary of being a Financial Risk Manager
- Higher salaries and better perks
- You get to add value to the firm and ultimately the economy
- You broaden your networks as you meet different people
- Higher-level job responsibilities – it’s never a boring day
- Career advancement through professional certification
- High level of job satisfaction
- Personal achievement and fulfillment
Credibility, respect, top earner, problem solver – these words are often used with certified FRM professionals in the same sentence.
The title is truly the key you need to unlock your true potential as a risk professional in finance.
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