Everything You Need to Know About FRM Exams

If you are in the finance world, you have likely heard of the Financial Risk Manager (FRM) designation.

But what exactly is it, and why has it become such a sought-after certification?

In simple terms, FRM Certification is a globally recognized credential awarded by the Global Association of Risk Professionals (GARP). It validates your expertise in identifying, analyzing and managing financial risks. Yet, the real value of this certification goes far beyond a title on your résumé. It equips you with the practical knowledge and analytical skills to make critical decisions in a complex financial environment.

Whether you are a fresh graduate looking to enter the world of risk management or a seasoned professional seeking to formalize your expertise, understanding what is FRM and how the FRM Exam works is crucial.

This article will guide you through every aspect of the FRM Certification, from exam structure and preparation strategies to career benefits and real-world applications.

Our intention is to not only help you understand the exam itself but also why this credential is a game-changer for anyone pursuing a career in finance.

What is FRM Certification?

The FRM Certification is not just another finance qualification.

The Global Association of Risk Professionals (GARP) offers FRM and it is specifically designed for professionals involved in financial risk management.

Unlike broader finance certifications like the CFA, the FRM focuses exclusively on risk. This specialization covers a range of critical areas including market risk, credit risk, operational risk, liquidity risk and investment risk management.

Holding a Certified Financial Risk Manager designation tells employers that you can anticipate and mitigate risks, safeguard company assets and contribute meaningfully to strategic financial decision-making.

It is recognized internationally, which means your certification travels with you, whether you aim to work in a local bank or a multinational financial institution.

FRM Certification Requirements

Achieving a Financial Risk Manager Certification involves more than just passing exams. Here’s what you need:

1. Pass both FRM Level 1 and FRM Level 2 exams. Each part builds on the previous one, with Part 1 focusing on foundational concepts and Part 2 diving into advanced application.
2. Complete two years of professional experience in risk management or a related area. You can acquire this experience either before or after passing the exams, but it must be validated by GARP.
3. Submit your work experience to GARP within five years of completing Part 2. Failing to do so may require you to retake the exams to maintain eligibility for certification.

Unlike many professional certifications, there is no strict formal education requirement to sit for the FRM Exam, making it accessible for motivated finance professionals from diverse backgrounds.

FRM Exam Structure

The FRM Exam is divided into two comprehensive parts:

FRM Part 1

FRM Part 1 tests foundational knowledge, including:

• Foundations of Risk Management
• Quantitative Analysis
• Financial Markets and Products
• Valuation and Risk Models

It consists of 100 multiple-choice questions and lasts 4 hours. The goal is to ensure candidates understand the fundamental tools and techniques necessary to manage risk effectively.

FRM Part 2

FRM Part 2 focuses on applying the concepts from Part 1:

• Market Risk Measurement and Management
• Credit Risk Measurement and Management
• Operational Risk and Resilience
• Liquidity and Treasury Risk Management
• Risk Management and Investment Management
• Current Issues in Financial Markets

Part 2 consists of 80 multiple-choice questions and lasts 4 hours. This section requires candidates to demonstrate practical understanding and analytical capability in complex risk scenarios.

FRM Exam Fees

As of late 2025, the FRM Exam Fees are structured as follows:

• Enrollment Fee: USD 400 (one-time fee for new candidates)
• FRM Level 1 Exam Fee: Early Registration USD 600, Standard Registration USD 800
• FRM Level 2 Exam Fee: Early Registration USD 600, Standard Registration USD 800

These fees cover access to exam registration. Candidates may also invest in FRM study material such as study guides, video tutorials and mock exams for more effective preparation.

While these amounts are accurate for 2025, the Global Association of Risk Professionals (GARP) notes that fees are subject to change. Candidates registering for the FRM Exam in 2026 or later should confirm the latest fees on the official GARP website before making payment.

FRM Exam Pass Rates

Passing the FRM Exam is challenging. The pass rates for 2025 were:

• FRM Level 1: 58%
• FRM Level 2: 52%

These statistics reflect the rigorous nature of the Financial Risk Management Exam, highlighting why structured preparation and high-quality study resources are crucial for success.

FRM Exam Preparation Tips

Success in the FRM Exam depends heavily on strategy and preparation. Here are essential tips:

1. Know the FRM Syllabus: Understanding FRM Topics and how they are weighted is the first step.
2. Develop a study plan: Allocate 200–240 hours for each part, and schedule your study time consistently.
3. Use high-quality study materials: Choose reputable FRM Study Material, FRM Study Guides, and video tutorials to strengthen weak areas.
4. Take practice exams: Simulate test conditions to build confidence and time management skills.
5. Stay updated: Monitor financial news and updates, as Current Issues in Financial Markets may be tested.

For candidates looking for structured support, AnalystPrep’s FRM Course provides summarized notes, mock exams and video lessons.

Career Benefits of FRM Certification

The Financial Risk Manager Certification opens doors to multiple high-paying career paths. Key benefits include:

• Higher earning potential: FRM-certified professionals can earn salaries ranging from $70,000 to over $150,000 depending on role and location.
• Global recognition: The credential is acknowledged internationally, allowing mobility across banks, investment firms, and financial institutions.
• Career advancement: Employers value risk management expertise, making the FRM a differentiator for leadership roles.

Top companies like Citigroup, Bank of America and Ernst & Young actively seek Certified Financial Risk Managers, reflecting the credential’s real-world impact.

FRM vs. CFA: Which is Right for You?

Both the FRM and CFA are respected credentials, but their focus areas differ:

• CFA: Broad financial expertise, portfolio management, and investment analysis.
• FRM: Specialized in risk management, offering deep knowledge in market, credit, and operational risk.

If your goal is to build a career in financial risk management, the FRM Certification may be more directly relevant.

Exam Day Checklist

Be fully prepared on exam day:

• Bring a valid ID matching your GARP Login details
• Use an approved calculator (TI BA II Plus or HP 12C)
• Bring confirmation email and exam registration details
• Arrive at the test center at least 30 minutes early

Frequently Asked Questions

1. How long does it take to prepare for the FRM exam?
On average, candidates spend 200–240 hours per part for effective FRM Preparation.

2. Can I take both FRM Level 1 and Level 2 on the same day?
Yes, but most candidates prefer spacing them out for optimal performance.

3. Does the FRM certification expire?
No, but you must submit the required work experience within five years of passing Part 2.

4. How does FRM compare to other certifications?
FRM is highly specialized, whereas CFA and other finance certifications are more general.

Conclusion

Pursuing the FRM Certification is a long-term investment in your career. Unlike broader finance qualifications, it equips you with practical tools, analytical techniques and real-world insights that you can apply immediately in your workplace. It validates your ability to manage risk, protects organizations from potential financial pitfalls, and positions you as an authority in the growing field of financial risk management.

The FRM journey requires commitment, strategic planning and disciplined FRM Preparation, but the rewards are substantial. Beyond the tangible benefits of higher salary and career advancement, earning the Certified Financial Risk Manager designation signifies your dedication to mastering one of the most critical areas of finance.

If you are serious about shaping a career in risk management, consider leveraging high-quality FRM Study Material and enrolling in structured Financial Risk Manager Courses. With determination and the right guidance, you can navigate the GARP FRM Exam successfully and join a global network of professionals driving safer and smarter financial decision-making.