# Certified Financial Risk Manager (FRM): Roles, Exams, and Career Outlook

![Financial Risk Manager: A professional accreditation issued by the Global Association of Risk Professionals (GARP).](https://www.investopedia.com/thmb/5lgpfK3CW0QrQb2mTs9pEMPqxdE=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/Frm_final-da19a8ac09284b8ebb5e1d0ae40569ea.png)

*— Investopedia / Michela Buttignol*

## What Is a Financial Risk Manager (FRM)?

The Financial Risk Manager (FRM) certification, issued by the Global Association of Risk Professionals (GARP), is a globally recognized credential for navigating modern financial risks. Those aspiring to earn this designation need to pass exams and gain relevant experience, offering an indelible mark of expertise in a rapidly changing financial landscape. This recognition opens up lucrative career opportunities across sectors such as banking, insurance, and asset management.  

### Key Takeaways

*   The Financial Risk Manager (FRM) designation is a globally recognized certification for professionals managing financial market risks, issued by the Global Association of Risk Professionals (GARP).  
    
*   Earning an FRM designation requires passing two rigorous exams and gaining two years of relevant work experience in risk management.  
    
*   Financial Risk Managers are essential for assessing and mitigating risks in various sectors, with a median salary of $156,100 as of 2023 and a projected job growth rate of 16% from 2022 to 2032.  
    
*   FRMs focus on specialized areas such as credit, market, and operational risks, while the Chartered Financial Analyst (CFA) designation provides a broader scope in investment management.  
    
*   The demand for FRM-certified professionals is expected to rise due to the rapid changes and growing complexities in financial markets.

## Key Responsibilities of a Financial Risk Manager

An FRM identifies threats to assets, earning capacity, or the success of an organization. FRMs may work in financial services, banking, loan origination, trading, or marketing. Many specialize in areas like credit or market risk.

FRMs assess risk by examining financial markets and the global economy to forecast changes or trends. They also create strategies to mitigate potential risks.

> **Important**
>
> Financial risk managers (FRMs) are required to be accredited by the Global Association of Risk Professionals (GARP).

## Steps to Achieve Your FRM Certification

The FRM exam focuses on using risk management tools and techniques in investment management.

To earn the FRM designation, candidates must pass a two-part exam and work two years in financial [risk management](https://www.investopedia.com/terms/r/riskmanagement.asp).

Professionals who hold the FRM designation can participate in optional continued professional development. The FRM focuses on key areas like market, credit, operational risk, and investment management. The exam is recognized in over 90 countries and is designed to measure a financial risk manager's ability to manage risk in a global environment.

The exam questions are practical and relate to real-world work experiences. Candidates are expected to understand risk management concepts and approaches as they would apply to a risk manager's day-to-day activities.

Part 1 of the FRM exam is 100 questions that focus on the following four topics (weighted as noted):

*   Foundations of risk management (20%)
*   Quantitative analysis (20%)
*   Financial markets and products (30%)
*   Valuation and risk models (30%)

Part 2 of the exam consists of 80 questions from the following topics (weighted as follows):

*   Market risk measurement and management (20%)
*   Credit risk measurement and management (20%)
*   Operational risk and resiliency (20%)
*   Liquidity and treasury risk measurement and management (15%)
*   Risk management and investment management (15%)
*   Current issues in financial markets (10%)

### $161,700

The median annual salary of financial managers and FRMs in 2024, according to the U.S. Bureau of Labor Statistics (BLS).

## Career Outlook and Salary Insights for Financial Risk Managers

In 2024, the median pay for financial managers, including FRMs, was $161,700 per year, according to the U.S. [Bureau of Labor Statistics (BLS)](https://www.investopedia.com/terms/b/bls.asp).

Jobs for FRMs are expected to grow 16% from 2022 to 2032, much faster than the average for all occupations. The BLS states that "several specialties within financial management, particularly cash management and risk management, are expected to be in high demand over the decade."

Most FRMs work in the financial services industry. Risk management teams are also needed in sectors like healthcare, engineering, technology, and natural resource.

According to GARP, these are the top 10 companies employing the most FRMs:

1.  ICBC
2.  Bank of China
3.  HSBC
4.  Agricultural Bank of China
5.  Citigroup
6.  KPMG
7.  Deutsche Bank
8.  Credit Suisse (now merged into UBS)
9.  UBS
10.  PwC

## Comparing FRM and CFA Designations

The [chartered financial analyst (CFA)](https://www.investopedia.com/terms/c/cfa.asp) designation is highly recognized globally. FRM is considered the "gold standard" of financial risk managers, and the CFA has a similarly stellar reputation among financial analysts.

Since both the CFA and FRM seek to certify professionals in the financial industry, they're often compared with each other.

The basic difference between the two is this: FRM is a more specialized designation than the CFA. The CFA covers a wide range of topics related primarily to investment management, including financial analysis, corporate finance, equities, bonds, derivatives, and portfolio management.

The FRM, on the other hand, focuses primarily on managing exposure to a variety of risks, including operational risk, credit risk, market risk, and liquidity risk.

The FRM and CFA also have different requirements.

To earn your FRM certification, you must:

*   Pass both Part 1 and Part 2 of the FRM exams
*   Have two years of professional financial risk experience

To earn a CFA charter, you must:

*   Have a bachelor's degree (or be in the final year of your bachelor's program) in order to start the CFA program
*   Pass Level 1, Level 2, and Level 3 of the CFA exams
*   Become a member of the CFA Institute
*   Have 4,000 hours of experience in an investment-related role

## Advantages of Earning an FRM Certification

There are several advantages to earning the FRM certification.

First, there is the reputation that comes with the program. It is widely regarded as the risk management industry's leading designation. Thus, it is a strong indication of ability and experience within the field. In other words, the FRM carries significant weight with employers and colleagues.

As financial markets rapidly change, the demand for risk management experts will likely increase over time.

The second benefit is the obvious educational one. The FRM certification gives professionals a deep understanding of risk management. In practical terms, that means knowing how to anticipate, respond, and adapt to critical risks.

## Which Is Better, CFA or FRM?

That largely depends on your career path. Generally speaking, FRMs are meant for managerial roles that focus specifically on risk (i.e., credit risk manager, regulatory risk manager, operational risk manager, and more). By contrast, CFA charterholders are primarily investment management professionals (i.e., investment analyst, portfolio manager, financial adviser, etc.).

## Is FRM Tougher Than CFA?

FRM exams are tough, but not as difficult as the CFA exams.

The pass rates for FRM Part 1 fall in the range of 40% to 50%; in 2023, the pass rate was 45%. For Part 2, they range between 50% and 60%, with a rate of 53% in 2023.

For the CFA exams, [historical pass rates](https://www.investopedia.com/articles/financial-advisors/121515/how-hard-are-cfa-exams.asp) for Level 1 and Level 2 are generally in the range of 35% to 50%. Level 3 pass rates are usually in the ballpark of 50%. It's this combination of lower pass rates and the additional exam that makes the CFA tougher than the FRM.

## How Much Does the FRM Cost?

The FRM charges a one-time enrollment fee of $400 to first-time FRM candidates.

From there, standard registration is $800 for Part 1 and another $800 for Part 2. Candidates who register early, however, are able to get a discounted rate of $600 for Part 1 and $600 for Part 2.

## The Bottom Line

The Financial Risk Manager (FRM) certification is the global standard for financial risk management, highly regarded for its specialized focus. Earning an FRM credential equips professionals with the expertise to navigate risk in today's complex financial markets, making them indispensable across various sectors. As the demand for risk management professionals continues to rise, obtaining an FRM can enhance career prospects and potential earnings. While the CFA designation is broader and more challenging, the FRM’s specific focus on risk management offers a distinct advantage for those committed to a career in this field.

> **Article Sources**
>
> 1.  U.S. Bureau of Labor Statistics. "[Financial Managers: Occupational Outlook Handbook](https://www.bls.gov/ooh/management/financial-managers.htm)."
>     
> 2.  U.S. Bureau of Labor Statistics. "[Occupational Outlook Handbook: Job Outlook](https://www.bls.gov/ooh/management/financial-managers.htm#tab-6)."
>     
> 3.  GARP. "[Financial Risk Manager Certification](https://www.garp.org/frm)."
>     
> 4.  Analyst Prep. "[GARP FRM Pass Rates: What You Need to Know](https://analystprep.com/blog/garp-frm-pass-rates-what-you-need-to-know/#)."
>     
> 5.  CFA Institute. "[CFA Exam Results and Pass Rates](https://www.cfainstitute.org/en/programs/cfa/exam/results-info)."
>     
> 6.  GARP. "[FRM Fees and Payments](https://www.garp.org/frm/fees-payments)."