Professional Risk Manager – Definition

Cite this article as:"Professional Risk Manager – Definition," in The Business Professor, updated October 10, 2019, last accessed October 21, 2020,


Professional Risk Manager (PRM) Definition

An individual with the certification of the Professional Risk Managers’ International Association   is called a professional risk manager (PRM). This is an expert who meets the requirement for financial risk managers and passed the certification examination of the association. There are four exams that professionals who are awarded PRM designation must pass, the topics cover cogent topics including risk management practises, financial theories, financial markets and instruments and many others. Professionals who are awarded PRM designation are required to uphold the standards, ethics and best practices of the profession.

A Little More on What is a Professional Risk Manager (PRM)

The Professional Risk Management program prepares individuals to become experts and professionals in professional risk management. Before individuals complete the PRM program, they are required to write examinations on topics such as risk measurement, risk management, financial theory, risk management practices and failures and others. Aside from meeting the requirements and passing the PRM exams, there are codes, condusts, standards and ethics that professional risk managers are expected to live by.

Professional risk managers can work in the following organizations;

  • Hedge funds companies.
  • Consulting firms.
  • Insurance companies
  • Investment firms or banks
  • Asset management companies.

The roles that professional risk managers can take up in companies include risk analysts, risk managers, financial managers and advisors, and credit risk managers.

Testing to Become a PRM

There are certain steps that must be taken before qualified individuals can be awarded the professional risk manager (PRM) designation. Individuals that enrol for the program must have completed their university program or be a degree holder in any course related to risk management. PRM exams are taken online, the exams are computer-based where candidates are required to answer multiple choice questions. There are four exams that candidates must take before they bag the PRM designation, the exams take up to two years before they are completed.

Defining Risk Management

Risk Management is a holistic process that is directed towards minimising the occurrence of risks or impact of risks when they occur. The processes in risk management include identification, assessment and control of risks in a project or company. Risk managers have the responsibility of identifying threats to the success of a company or project and find ways to control the impacts or occurrence of such threats. There are many factors that contribute to risk, these are what a professional risk manager should look out for in order to minimize the effects of those risks. Unpredictable events are the most causes of threats to the success of a project or business.

Defining Financial Risk Management

Financial uncertainty is a major source of risk in any project, risk managers need to tackle risks that emanate from financial factors. Risk managers are responsible for tracking, reporting and exposing threats to an operation or project. The use of financial instruments to manage and control the impacts of risk is called financial risk management. Financial risk management is an arm of general risk management that identifies risks, assess them and find ways to control them using financial instruments.

There are two major approaches to financial risk management, these are qualitative and quantitative financial risk management.

The Professional Risk Managers’ International Association

Since the establishment of the Professional Risk Managers’ International Association (PRMIA) in 2002, the association has been equipping qualified candidates on skills needed for the identification, evaluation and control of different types of risks. There are different types of risks, the major ones are; operational risks, legal risks, credit risk, market risk, business risk and volatility risk. PRMIA is a non-profit establishment that has the representation of members across the globe. The association is governed by a board of directors that members elect.

References for “Professional Risk Manager – PRM › Investing › Asset Allocation › Finance › Blog › Credit Research Fundamentals › Finance Certifications › FRM Study Guide…/Professional_Risk_Managers%27_International_Associatio…

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