Financial Risk Manager (FRM) Definition
Financial risk manager, also known as FRM, is a professional designation that the Global Association of Risk Professionals (GARP) issue. FRM accreditation from GARP is a financial risk professionals’ premier certification with global recognition.
With recognition in more than 90 countries, the FRM exam measures the ability of an individual to manage risk in a global environment. The certification is ideal for individuals who aspire to specialize in assessing financial risks on behalf of insurance companies, banks, regulatory agencies, accounting firms, and asset management firms.
FRM Exam 2019
To get the FRM designation, an individual has to take and successfully complete a comprehensive examination. The exam covers several topics, including risk management tool applications and investment management process techniques.
The design of questions is to ensure that it gives a candidate practical skills and experience in the real world. Candidates are expected to understand risk management approaches and concepts as used by the risk manager’s everyday activities. Program for FRM follows major risk management disciplines such as:
- A candidate must have not less than two years of relevant work experience
- A candidate must take, complete and pass the FRM exam
Note that unlike other professional certifications, FRM does not have
accompanying coursework. However, there is a study guide and reading lists that
Global Association of Risk Professionals offers to help candidates in exam preparation.
The FRM exam is divided into two main sections. The first part
is on financial risk assessment, and consist of the topics listed below:
- Quantitative analysis
- Financial products
- Core risk management concepts
- Valuation and risk models
The second FRM exam section focuses on the risk assessment application.
The topics in this section are as follows:
- Integrated risk management
- Investment management
- Operational risk management
It is worth to note that the GARP recommends that you take additional professional development for at least 40 hours every year.
Financial Risk Manager Exam Costs
GARP’s first part of the exam costs around $750. This amount of fee is for those candidates who do application six months in advance or more. The costs include an enrolment fee of $400 and $350 for the exam.
However, for those applying between 60 to 90 days in advance, the cost is $875 and $457 for the exam. For late enrolment (application less than 90 days before the exam), the cost is $1,050, and the exam fee rises to $650.
As for the second part, there is an examination fee waiver, with the exam fees remaining unchanged ($350 to $650). Candidates who do a retake in the first part of the exam will also get their enrolment fee waived.
GARP provides study materials, and an applicant can access them free of charge. However, there are sets of study books that candidates must pay before accessing. Each set of books goes for $300. For those who want to cut on the costs of purchasing study books, can do so by going for e-books, which goes for $250 per set.
What Does a Financial Risk Manager Do?
- Designing and executing comprehensive risk management procedures, process, and policies
- Identifying methods of assessing and analyzing financial risks
- Evaluating the intensity of risk and budgeting
- Establishing risks that the organization is ready to take
- Preparing a customized report on risks and record maintenance
- Establishing contingency plans and precautionary measures, based on the risk’s assessment
- Reviewing contracts, legal documents, policies, new programs, and activities, among others
- Development of proposals using their forecasting and risk analysis skills