5 Financial Risk Management Certification Requirements

Obtaining financial risk management certification is an attractive field for many aspiring professionals. The job offers high pay, stable employment, and does not require a college degree. In 2018, the US Bureau of Labor Statistics estimated that, on average, a financial risk manager made over $125,000 annually. Prospective financial risk managers looking to gain certification and obtain a job in the field should be aware of the requirements. Here is a list of requirements to become a certified financial risk manager.

Learn The Materials

Becoming a risk management professional requires passing a series of difficult exams about financial management. Applicants must learn about the subjects such as the cost of debt tested so they can pass the tests. Learning the materials can be done in person or online with specialized courses designed to prepare students for the exam. These courses can be costly, but this cost can be recouped easily owing to the high salary of certified risk managers. Alternatively, risk managers can study the material independently using textbooks and online practice tests. Whatever method applicants choose, they should be aware that it is a multi-year commitment.

Pass The First FRM Exam

In order to begin certifying as a financial risk manager, you must apply for and pass the first round of testing. The exam consists of 100 multiple choice questions and deals with a variety of topics related to financial risk management. These topics include but are not limited to valuation and risk models, quantitative analysis, and the foundations of risk management. According to the testing body, less than half of all applicants passed this test and their average study time was over 200 hours. It is possible to take the second exam at the same time as the first, but will only be graded if the first test was passed. Risk managers should understand the topics the first FRM exam will cover before signing up to take it.

Pass The Second FRM Exam

After the first round of testing, applicants must apply for and pass the second round of exams. The second exam is 80 multiple choice questions and focuses more on market management. The topics covered by the exam are market risk management, operational resiliency, investment risk management, and current issues in financial markets. This exam has a higher pass rate compared to the first test. However, the average study time is around the same as the first exam. Results from this test will be published around six weeks after the day of testing. Of course, you can use personal finance courses to increase your knowledge as well. You should understand the topics the second FRM exam will cover before signing up to take it.

Earn Two Years Of Experience In Finance

After passing the qualifying exams, risk managers are expected to show competence in their field via a full time job. Applicants must be prepared to explain how their chosen position qualifies them for work in financial risk management. As such, aspiring risk managers should choose a position that deals directly with financial management. Applicants have five years after passing their exams to gain at least two years of experience and apply for their certification. Prospective financial risk managers should begin earning finance sector experience as soon as possible.

Apply For Certification

The final step in becoming a certified financial risk manager is to apply to the Global Association of Risk Professionals (GARP) board. The application submission needs to include a description of the two years an applicant spent gathering financial experience. This description should give a brief explanation of why the experience applies to risk management, such as business debt consolidation. Submission comes with a $100 fee. Once approved by the GARP board, financial risk managers can begin practicing immediately. Applicants should be able to relate their financial sector experience to risk management when submitting their applications.

In order to become certified as a financial risk manager, applicants must meet a number of requirements. First, they have to study the material presented in the two exams that they will take. After this, they have to sign up for and pass the series of exams. If applicants pass these exams, they have five years to gain experience in a relevant financial field. After they gain this experience they can submit their final application for certification. By meeting these requirements, prospective financial risk managers can become certified in as little as 3 years.

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