Estimated reading time: 5 minutes
Being a Financial Risk Manager is one of the most sought-after jobs in this field and many people are considering getting qualified for the role.
Some of them decide to get a certification early on in their career, after only a few years of work experience. That’s fine, but it’s important to know that it’s never too late, because you never know when you might need this certificate.
A lot of people take the exam after 10+ years of working in the field, and it makes it even easier for them because they are already familiar with the concepts and terms from their working environment.
If you are thinking about taking up this challenge, but not sure whether you are ready for it, this is the article you need.
Below, you will find several things that you need to know before you decide to go this route. You will also find some useful tips that may help you organize your preparation in a more efficient way.
The exam is actually divided into two (2) parts. Candidates have a maximum of four hours for each part, eight hours in total. You can do both parts on the same day, but you don’t have to do them together if you don’t have enough time to prepare for both.
You can schedule Part II after you get confirmation that you’ve passed Part I. A lot of people wait a couple of months (or even a year or so) that they can prepare for the next round.
This is completely okay because most persons who take these tests are working full-time and don’t have a lot of time to dedicate for studying.
The format of both parts consists of multiple-choice questions. Part I contains 100 questions, while Part II contains 80 questions.
The time to prepare
The time needed to prepare varies from person to person, as everything depends on one’s previous experience and knowledge.
If you have taken similar tests in the past and you’re familiar with the concept, you’ll probably need less time than other candidates.
One survey revealed that the majority of the candidates needed around 200 to 300 hours to prepare adequately. Now, there are various ways to organize your time, as everything depends on how much time you have each day to dedicate to your studies.
There’s an official study plan that you can follow and it’s divided into 15 weeks, which means you’ll have to dedicate around 15 to 16 hours every week to study.
Of course, that’s just a recommendation and you can organize your schedule however it suits you.
People with a lot of experience managed to pass this exam with less than 100 hours of studying, but you should note that they’re more of an exception than the rule.
The requirements needed
If you want to obtain Certification, there are three main rules you have to follow.
First, you have to pass Part I in order to be allowed to do Part II. Some people do them on the same day, although that’s not a requirement.
However, once you pass the first part, you have four years to pass the second, or else, you will have to retake Part I as well.
The official rule says that you have to finish Part II by the end of the fourth year since you’ve passed the first.
Finally, the third rule is that you have to submit and prove that you have at least two years of full-time work experience in the field.
Relevant work experience
Now, you may wonder what is considered “relevant work experience” in this sector. You have to be able to prove that risk management was part of your main role or at least one of your most important tasks.
The good thing is that a lot of different roles qualify for this: people that worked as risks analysts, those that worked in audit, trading, treasury, etc.
However, even a lot of people who worked as consultants managed to have their work experience accepted. Therefore, it’s always a good idea to check with the governing body.
Even if you are not sure whether it had enough to do with risk management or not, it may be worth checking just to see what the board thinks.
Things they test on in part 1
The first part is all about being familiar with tools that you can use to measure and assess financial risk. If you have two years of relevant work experience, you’ve probably already used some of the tools that we’re about to mention.
Some of them include quantitative analysis and creating & evaluating risk models. However, practical knowledge may not be enough, and it’s always a good idea to learn more about the tools that you are already using.
Of course, the exam also may test your knowledge from the following fields: risk management theories and concepts, knowledge about financial markets and various finance products.
Things they test on in part 2
Although this part of the challenge is also based on multiple-choice questions, it’s somewhat more practical. While the first part was all about understanding tools, the second part is about the ways we can apply them at work.
Some of the parts worth mentioning include measuring market risk, credit risk, liquidity and treasury risk measurement, and so on.
Of course, it’s not just about measuring and assessing risks, but it’s also about management so you can expect to get some questions that cover that topic.
Finally, the expectation for this entire course is that you stay up-to-date with things that are currently happening in financial markets.
You may be asked some relevant questions about current issues and challenges as well as possible ways to solve them.
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