Table of Contents
- Are you interested in getting an FRM certification?
- What is the FRM Exam?
- Part I
- Part II
- About Financial Risk Managers
- Requirements to Earn the FRM Certification
- Strategies for Passing the FRM Exam
A person with a financial risk manager (FRM) certification can, on average, expect to make frm exam in $99,000 per year.
Getting that certification doesn’t come easy, however, and people interested in that title have to be very knowledgable about a variety of topics related to financial risk.
Are you interested in getting an FRM certification?
To learn more about the FRM Exam and what it takes to pass.
Keep reading to find out what you need to know about frm exam
What is the FRM Exam?
The FRM Exam is a two-part examination that tests the application of risk management tools and strategies toward investment management processes.
The questions that are asked are practical and will be related to actual work experiences that an FRM may encounter.
A candidate for this exam needs to understand risk management approaches, concepts, and techniques. It is important to understand the daily activities of an FRM before attempting to take this exam as well.
FRM Exam Registration
You will be tested on knowledge about tools used to assess financial risk, including fundamental risk concepts, financial products, risk models, financial markets, and quantitative analysis.
This examination is recognized as the standard for financial risk professionals. It has been adopted by businesses to make sure that their employees in the risk management field know the latest concepts.
If your desire is to become an FRM, doing so will boost your credibility in the field and earn you more respect from others, including employers, clients, or colleagues. You will be able to maximize your professional growth opportunities in finance.
The first part of the exam is 100 multiple-choice questions. It focuses on the tools that are used when assessing financial risk. It also focuses on the foundations of risk management, valuation and risk models, and quantitative analysis.
Part I of the FRM Exam is always in the morning and has a time limit of 4 hours.
The second part of the exam is 80 multiple-choice questions. This section focuses on applying the tools that were discussed in Part I.
In this section, expect to see more questions about investment management, credit, current market issues, and integrated risk management (among other things).
Part II of the FRM Exam is always in the afternoon and has a time limit of 4 hours.
About Financial Risk Managers
People that take the FRM Exam do so with the hopes of becoming a financial risk manager (FRM).
An FRM is a professional title that is used by the Global Association of Risk Professionals (GARP). This accreditation is recognized around the world as the best certification for financial risk professionals in terms of financial market dealings.
FRM Exam Questions
FRMs have specialized knowledge in areas related to risk and would generally work for certain types of companies, including banks, accounting firms, or asset management firms.
One of the main goals of an FRM is to find threats to the assets, success, or earning capacity of a business. They analyze the financial markets and the global financial environment to predict future changes. After this, an FRM will develop strategies that will ensure potential risks are not a problem for that organization as they arise.
Requirements to Earn the FRM Certification
There are a number of things that must be done before someone can call themselves a certified FRM.
Citified FRM Exam
- Register for the FRM Exam Part I
- Pass the FRM Exam Part I
- Register for the FRM exam Part II
- Pass the FRM Exam Part II
- Demonstrate at least two years of relevant work experience
Prior to 2009, both Part I and Part II of the exam were offered as being completed on the same day. It has now been changed to offer one at a time and twice a year in May and November.
You do have the option to sit for both exams on the same day, but it is not required. It is important to note, however, that if you don’t pass Part I in the morning, Part II in the afternoon will not be graded.
Strategies for Passing the FRM Exam
Not just anyone is able to pass this exam, but with the right amount of studying and practice, you can pass both sections. Here are some simple things that you can do to make your chances for passing the FRM Exam higher.
1. Focus on the Big Picture
When you’re studying, you have to remember that the concepts you are studying relate to a bigger, whole picture. You should know at least a little bit about all of the concepts to better understand the big picture.
This means that you will know all of the basic information and be able to narrow down the answer choices more effectively on exam day. Even if you don’t know the exact formula for a specific concept, at least you know what that concept is and can make an educated guess.
While you may not get a perfect score using just this strategy alone, even being able to eliminate one of four multiple-choice answers increases your chance of getting it right from 25% to 33.33%.
Using this technique, you can figure out what is relevant to the question and what is not before choosing an answer.
2. Create a Structured Study Plan
The content on the FRM Exam is not something that you can learn overnight. You need to create a structured study plan that will help you concentrate on learning the content and being able to answer application questions.
Start by outlining the time frames and goals that you want to meet. Create a schedule for when and what you will study. This will help hold you accountable for your own learning outcomes.
3. Understand the Formulas (And Why They’re Used)
There will be some questions on the FRM Exam that can only be answered by using a certain formula and a calculation. In some cases, however, you might be able to figure out what the answer is without having to do these extra steps.
If you truly understand the formula and its relationship to the concept, the right answer might be clear based on the choices you have.
No matter what formula you come across in your reading, it is a good idea to try and understand why it is used, what it tells you, and how it is related to other concepts.
4. Start Studying Sooner, Not Later
To master the curriculum for this type of exam, you have to study for at least a couple hundred hours to really learn what you need to know.
There are some candidates that don’t start studying until it’s too late and feel they can catch up to those that have been studying for months. In reality, you can’t learn what you need to know in such a short time span and you need to stick to a study plan.
Cramming in the final few weeks before the exam is not going to cut it. With all of the money you are spending to take these exams, it is much better to prepare and practice well before the exam date draws near.
5. Focus on the Most Important Concepts
Enhance your studying efforts by focusing on the things that are most likely going to be on the exam.
This goes back to knowing the basics about everything the exam might cover, but it also goes deeper in that you should learn all that you can about the things that are more likely to show up on exam day.
You will be able to increase your chance of passing exponentially by knowing most of the answers to questions about key concepts.
6. Don’t Forget to Practice
Practice makes perfect and taking an exam is no exception. Some candidates believe that simply reading the material alone is enough to pass, but this is generally going to make it much harder on yourself.
Utilize the practice questions and practice exams available to help you understand where your strengths are and where your weaknesses are related to the material.
Without practice, you may have more difficulty than you think applying the concepts and terms that you have studied so hard.
7. Create a Study Space
Have a space available to you that is dedicated to studying until you are able to take the exam. It should be free of clutter and comfortable for you to spend a lot of time in.
Before you get started, figure out what works best for you to make the study space most effective. For instance, do you work better in total silence or do you like having music on in the background?
Be sure you have access to all of the study materials you need as well, whether that be your book, flashcards, notes, or computer.
Ready to Test?
The FRM Exam is not easy, but it is possible to pass if you prepare the right way.
All of the work that you put into learning concepts and formulas will pay off when you have the knowledge you need to be an effective FRM.
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