Estimated reading time: 10 minutes
Do you ever wonder why the Financial Risk Manager pass rates are so low? FRM exams tend to be trickier than other professional certifications in finance and risk management.
These exams as offered by the Global Association of Risk Professionals (GARP ®) typically carry a low pass rate in the 40 percentile because that continues to be the average performance for these students across the world.
Below are some of the main reasons why the level is what it is:
1. Students under-estimate test difficulty
After the exams, many students will tell you that the exam was a lot tougher than thought it would be.
The questions are not only designed to test your knowledge of the course content, but also practical applications of risk management concepts in the real world.
Students often need to have superb analytical skills both in quantitative and qualitative questions. For that reason, we find that the global rate will be low.
Students also tend to underestimate the amount of time needed to study for the examinations. The course demands a proper understanding of various risk management concepts and techniques.
And the fact is that there are no shortcuts available but adequate studying to gain such knowledge.
2. GARP is seeking to create top-notch risk managers
The Global Association of Risk Professionals is aiming to mold highly proficient risk experts through their Financial Risk Manager program.
The certification course helps to create risk experts who are able to analyze accurately, control and explain varying risk scenarios. For that reason, the tests are complex, drawn from a wide range of topics in risk and finance.
Furthermore, GARP keeps abreast with the changing global economic conditions and regulations.
For that reason new concepts are tested each year to produce professionals who can deal with the dynamism of the industry. After getting certified, you can expect to have a distinct competitive advantage over your colleagues.
The program works to sharpen your knowledge of Credit Risk, Market Risk, Operational Risk and Investment Management. In all these risk areas, the stakes are high.
To ensure that the candidate has studied and gained a holistic understanding and appreciation of risk management, the exams have to be complicated.
3. Students still do not adequately read the questions
Just like any other test, you can go through, seemingly doing everything right. However, once you receive those results, you wonder what went wrong.
You were confident that you provided the correct answers, but then the results prove otherwise. The reason for that is failing to understand what is being asked from the questions.
This happens habitually with too many students and, as a result, we find low passing levels each year.
Without properly reading the questions, students often end up providing the right answer to the wrong question. This is especially true with multiple choice testing.
It is always advisable to read the question more than once, rephrasing it in your mind.
Additionally, experts recommend that during the exams you should underline or highlight keywords to help dissect the question. It can help you to stay focused on the essential things.
And remember to keep calm- the pressure of the day can cause you to make unwanted mistakes. If it helps, answer the most straightforward questions first before attempting the difficult ones.
The best students always skim through the paper first, finding out what are the main concepts being tested before starting the exam. This practice helps to identify the easier questions and isolate the complex ones that need special attention.
4. Waiting too long to start studying
Unlike with some college tests, you will hardly make it by cramming the night before. Students who pass both levels have one thing in common- they take time to research and prepare for the test adequately.
It can take at least 200 hours to prepare for each level of this course.
Your exams will require you to start revising the material as early as possible. The low pass rate is an indicator of the complexity of the test. Overnight studying on the exam date will not give you an excellent score.
When you start studying early, you will have enough time to internalize difficult concepts.
Preparing in advance helps to build confidence come the exam day. Level 2 exam is highly qualitative, whilst level 1 can be unbearably quantitative in nature.
Every year there are new question types derived from varied topics and your books will adequately cover the course topics. For that reason, early revision gives you enough time to study for the exam.
Failing to go through all the core readings from the guides is a significant risk.
5. Life getting in the way
The program requires many hours of studying for both exams. The course materials and topics are extensive too. If because of family, friends or work you are not able to commit to the time it takes, then chances are you will find the exams very challenging.
This is a professional program and the GARP institute understands too well that many people have to juggle work, family, friends and studying.
Only by properly scheduling time for work, family and studying, will you have a good chance of passing the exam.
There’s nothing wrong in having a social life even as you prepare for getting your accreditation. Going to work is equally important since most people pursue certification for career advancement.
However, as the exam date draws closer, you will need to spend more time for studying. You might want to dedicate a part of your weekends and late evenings to your preparation efforts.
6. Misinterpreting your examination questions
One of the biggest reasons why the rate is low is because many students fail to understand the concepts and what is being asked.
Students often spend much time memorizing snippets of data instead of understanding the real concepts. That robotic kind of learning often causes many to misinterpret the questions and select incorrect answers.
Knowledge of the test topics and questions can score you a few marks on the paper. However, for excellent performance, you will need to have an in-depth understanding of the fundamental concepts.
The financial risk manager exams will test your ability to apply the risk management concepts in practical situations.
The successful students will always seek to master all aspects of the course. This is necessary, as questions are not always straightforward.
The paper can be sometimes twisted and quirky, requiring you to apply analytical and critical thinking together with decision-making skills.
7. Having poor study habits
Many students find the course to be difficult simply because of poor study habits. The low rate is another indicator of that. Getting ready for this professional certification requires proper planning.
The right way to study for the exam is to take time and plan on how you will approach your studies. When creating a study plan, you need to consider factors such as family demands, work and your availability.
You should also consider the amount of FRM study materials you have to go through to sit for the exams.
8. Timing is everything
The best performing students always work with a timetable and a plan. These can be as flexible as you want, and realistic too. Your study plan needs to have small, consistent achievable targets.
Achieving small milestones on a regular basis can help to give you the right motivation for the exam.
When studying, avoid distractions. Find time away from everyone else to concentrate only on your studies. Turn off your cell phone or log out of social media accounts. You can get back to tweeting after your study session.
It is the same case with the TV, family and friends. For that matter, studying in a library or some isolated area is preferable.
9. Understanding versus Remembering
When preparing for the exam, study to understand and not to remember. Instead of cramming concepts, it would help to chew it down mentally to relate to the knowledge from the study materials.
Many questions are practically oriented, so understanding will work better for you than simply remembering.
10. Not using enough practice tests
Apart from reading books and notes, it is equally necessary to take mock tests. Practicing questions can help you get mentally prepared for the challenging and thought-provoking questions.
Even though there is a low chance that GARP will repeat questions from the previous years, sample questions will train you on how to think and apply the knowledge you get from the course materials.
The best thing about using practice questions to prepare is that you can gauge the level of your readiness for the same.
Usually, students are able to know there are areas of weakness and work on them in advance before the real exam. It also helps to boost confidence if you pass the mock tests.
The more you study using practice questions, the more chances you will have at correcting mistakes and sharpening your knowledge before the actual exam. You will avoid making the same mistakes on the big day.
You can also ask professionals who have already passed to share with their proven techniques to include in your strategy.
11. Passing easy practice tests leading to over-confidence
Practice questions help you to get familiar with ways of applying your knowledge in the exam. Practicing with questions of a higher difficulty level than the exam will help you analyze your overall level of understanding.
Using easier questions to study will only make you overconfident. This too contributes to the low passing grades globally. Overconfidence or overestimation of your abilities can cause you to fail the course.
The mock tests are supposed to help you gauge your understanding, but if they are too easy, you are likely to slack off in your studies and study less.
You will get into the exam room ill-prepared and hasty to prove that you know everything. That often leads to misinterpretation of the exam questions.
Preparing using easy or sub-par exam questions is a recipe for disappointment on the big day. The best practice questions need to be precise, complex and continuously challenging to prepare you better.
The practice questions should test your knowledge and understanding of all the topics.
12. An absence of work experience
Even with solid technical knowledge, you might still find it difficult to overcome the hurdle. The kind of practical knowledge gained by having work experience in finance is truly invaluable.
Having work experience in finance or risk, will help you in understanding how the industry works.
That also includes joining relevant forums, reading and following industry news. Analyzing how the industry works can help you to understand the course content easily.
13. An absence of study experience
The topics are specifically focused, and many persons would not have been exposed to such questions in college or previous studies.
Your exams will be laser-focused on risk management aspects in the finance industry. And your college courses in accounting, finance or actuarial science cannot possibly adequately cover specialist areas of risk.
The detailed nature of the course needs adequate studying to pass the exam. Thankfully, the GARP institute provides all candidates with core readings to help in your preparation.
14. Over-studying…leading to mental fatigue
Over-studying will absolutely do you more harm than good. This marathon requires you to put in many hours of study; however, that does not mean that you have to be perfect in all minor details.
This often happens with the type A class personalities as the exam dates draw near. The classic result of over-doing it is fatigue, stress and possible exam failure even after adequate preparation.
Plan your studies such that you have breaks to engage in other activities before returning to your books. You could participate in activities such as meeting with friends or checking up on your family.
Getting that kind of balance will help you to make the most of your study time and retain the concepts.
And please, avoid studying all night before the exam day. Take some time off to relax or workout. Keeping fit can help to keep your stress levels low. Slow down, but stay focused.
The FRM certification is globally recognized and there is pressure on GARP to uphold strict standards through complex and comprehensive exams.
As a result, to be globally recognized as a risk expert requires that you must be the best of the best.
We hope that this article was helpful to you in explaining why the pass rate is what it is. Try our sample questions to test your readiness and be sure to download all our free content on the Shop Page.
The QuestionBank Family