The FRM Program: Expectations, Benefits, and Tips

Introduction

A Financial Risk Manager (FRM) that desires to be recognized by the Global Association of Risk Professionals (GARP) is required to pass an exam that grants hopefuls the right of passage into fulfilling careers within the world of finance. Passing the exam grants you with an FRM certification that sets you apart in the global marketplace. To employers, this certification signifies mastery in various risk practices and unlocks a global network of risk managers that dedicate themselves to improving financial stability and are great connections for you to have as you progress through your career.

The FRM Exam

The exam is broken down into two parts. Each section is paper-based, and both take approximately four hours to complete. The FRM exam is offered on two different dates this year (May 20th, 2017 and November 18th, 2017). Both parts of the exam may be taken on the same day, but the best strategy for many is to schedule one part in May, and the other in November. This will require you to study less material all at once, and break up your workload up in a much more manageable way.  There aren’t any penalties for incorrect answers while taking the exam, so you are encouraged to answer every question fully to maximize your potential. Both parts of the exam must be passed to be granted the FRM certification.

The test is scored on a curve based on the top 5% of participants. This means that the actual grade required to pass the exam cannot be calculated until all the candidates have submitted their exams and have been graded by the FRM Committee. To calculate the passing score, the GARP uses the curve to find an overall passing number. You can miss a few questions on the FRM exam and still produce a satisfactory score. Very little hopefuls ever walk out of the testing center with the impression that they have correctly answered all the questions that they were accessed on.

The exam has experienced a great amount of popularity recently and has grown by 29 percent in the total number of hopefuls that registered to take the exam.

FRM Exam – Part 1 Content Breakdown

FRM Exam – Part 2 Content Breakdown

Why Register for the FRM Exam?

An understanding strategic risk is extremely pertinent to becoming a good Financial Risk Manager. The completion of the FRM exam ensures there is no doubt you have mastery on this topic and are a very determined individual with strong work ethic. Becoming recognized will also help you land jobs and increase your value as a potential employee. There are over 32,000 certified FRM’s across the globe.

An FRM certification looks excellent on a resume. It displays the kind of professional you are and dedication to the field. In addition to strategic risk, mastery of the exam will also show that you have extensive knowledge in other crucial topics that may be the factor between getting a job or not, such as technical aptitude like statistics, modeling, and valuation.

One who has an FRM certification is assumed to be a dynamic, forward thinking individual that abides by all ethical standards and upholds professional integrity. Employers will expect these qualities, so make sure you uphold these beliefs while undergoing any interview process.

The Global Association of Risk Professionals

The GARP is a risk-focused community that works together to create a network of professionals to offer exemplary knowledge and networking opportunities that would not be otherwise found by any other organization or group of people. The GARP contains members from every country in the world. Members work in unison to make various organizations run as efficiently as possible. Typical institutions GARP members work at include:

  • insurance companies
  • global banks
  • regional banks
  • central banks
  • asset management firms
  • securities regulators
  • hedge funds
  • universities
  • multinationals
  • large industrial corporations

Members of the GARP have access to the most recent financial information and are able to access premium educational materials inaccessible to non-members. Holding the FRM certification is your invitation to the association, and lets any potential employers know that you take all the steps necessary to be the best risk analyst possible. Employers will value you more as an employee by the knowledge and connections you have gained. Because of the benefits, a GARP member will have a much easier time accelerating their career as opposed to one who has decided to not pursue the requirements that are needed to join the association. Pursuing the certification that unlocks these benefits requires you to pass two rigorous parts of the FRM exam, as well as have two years of relevant work experience under your belt.

The FRM Committee

The exam is decided upon a pass/fail system governed and decided by the FRM Committee. This committee is comprised of top-level experts and practitioners of various risk topics such as:

  • Credit, Operational, and Market Risk
  • Emerging Markets
  • Corporate
  • Academia
  • Rating Agencies
  • Quantitative Discipline
  • Legal and Regulatory Practices
  • Assessment Management
  • Insurance

This committee is essential in preparation, execution, and review of the FRM exam. They are responsible for reviewing the topics and weight of each section of the exam every year to ensure the most relevant, useful information is emphasized on the test. It takes about six weeks after completion of the exam on either of the dates for the committee to review how you performed, process the information, and reach out to you, so you can expect to hear your results of the test then.

Conclusion

Embarking on the FRM exam may be a difficult and time-consuming task, but the benefits of becoming a certified financial risk manager justify committing the time, effort, and finances by far. Upon completion, you will be an expert on all relevant topics within your field, and be much more sought after by potential employers. Your mastery of topics such as risk management, emerging markets, quantitative analysis, valuation and risk models, and current issues in the field will be far superior to someone who did not pursue the FRM certification.

Be sure to plan far ahead of time to make sure you leave yourself a satisfactory amount of time to prepare adequately. Using online resources will help you in your studies, and programs like AnalystPrep will allow you to track your progress so you can stay track to your study plan with ease.

Understanding what to expect during test day of the FRM exam is valuable information to help you ensure excellence, and as long as you develop a preparation strategy and choose a program that works for you personally, you should be able to crush the test and get started on your career to begin applying the knowledge you have learned in order to do what you love.

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