game maker start menu GARP: Global Association of Risk Professionals

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Asset Allocation

Financial Risk Manager – FRM

Reviewed by

Investopedia Staff
Updated Dec 27, 2017

What is a Financial Risk Manager – FRM

Financial Risk Manager (FRM) refers to a professional designation issued by the Global Association of Risk Professionals (GARP). The GARP FRM accreditation is globally recognized as the premier certification for financial risk professionals. It is suitable for individuals who want specialized knowledge in assessing risk on behalf of banks, insurance companies , accounting firms, regulatory agencies and asset management firms.

BREAKING DOWN Financial Risk Manager – FRM

To receive the FRM designation, candidates must successfully complete a comprehensive, two-part exam and demonstrate that they have two years of work experience in financial risk management. Professionals who hold the FRM designation can participate in optional continued professional development. The FRM program follows the major strategic disciplines of risk management: market risk, credit risk, operational risk and investment management. Recognized in over 90 countries, the exam is designed to measure a financial risk manager’s ability to manage risk in a global environment.

(To learn more about other financial certifications, see: The Alphabet Soup of Financial Certifications. )

Financial Risk Manager Exam

The FRM exam consists of two parts, Part I and Part II. In Part I, candidates must answer 100 multiple-choice questions within four hours. This section of the exam tests knowledge of the tools used to assess financial risks, such as quantitative analysis , fundamental risk management concepts, financial markets and products, and risk models.

Part II of the exam requires candidates to complete 80 multiple-choice questions within four hours. This section of the exam requires candidates to apply Part I knowledge to market, credit, operational and integrated risk management ; it also examines topical risk management issues. Both exams are held in May and November each year at over 100 different global locations.

To prepare for the FRM exam, GARP releases a study guide, a four-volume book/e-book set and access to practice exams. Candidates receive a pass or fail result that is typically emailed six weeks after the exam. The FRM Committee determines the passing scores. Candidates also receive quartile results that allow them to compare their results to other candidates. Statistics show that Part I of the FRM exam is more difficult, with an average pass rate of 44.5% between 2013 and 2017. Conversely, the pass rate for Part II of the exam over the same period is 55.2%.

Financial Risk Manager Exam Fees

The fee to take Part I of the FRM exam in 2018, either in May or November, is $350 for early registration, $475 for standard registration, and $650 for late registration. In addition, there is a $400 registration fee due when you sign up for Part I of the exam. For Part II, the fees also are $350/$475/$650, with no additional registration fee. Consult the GARP website for exact exam dates and registration schedules.

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Related Terms

Professional Risk Manager – PRM

Professional risk manager is a designation awarded by the Professional Risk Managers’ International Association.


Portfolio Manager

A portfolio manager is responsible for investing a fund’s assets, implementing its investment strategy and managing the day-to-day portfolio trading.


Money Manager

A money manager is a person or financial firm that manages the securities portfolio of an individual or institutional investor.


Gap Risk

Gap risk refers to a security’s price changing from one level to another with no trading in between.


Risk Shifting

Risk shifting is the transfer of risk to another party.


War Risk

War risk is the probability of loss of, or damage to, cargo, vessels and/or passengers from war.


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