A person must first obtain certification from the Global Association of Risk Professionals in order to become a financial risk manager (FRM) (GARP). A candidate must pass a two-part exam administered and approved by GARP in order to receive FRM certification. Candidates frequently fail Part I or Part II of the certification exam, and according to GARP, only 24,000 Certified FRM holders exist worldwide as of 2011. The candidate must then gain two years of experience in a financial field such as economics, portfolio management, academic research, auditing, or risk consulting after passing both portions of the exam.
To prepare for the certification exam to become a financial risk manager, a person can enroll in a course of study through an approved financial institute. Only the Global Association of Risk Professionals office in New York can register them for the exam. To pass Part I of the exam, it is commonly recommended that a person devote 150 to 200 hours of study time. Part I of the test covers quantitative analysis, risk management foundations, financial markets and products, as well as valuation and risk modules. The candidate must analyze and solve hypothetical market risk problems in this section of the test.
Market and credit risk measurement and management, operational and integrated risk management, investment management, and current issues in global financial markets are all covered in Part II of the exam to become a financial risk manager. For this section of the exam, an additional 150 to 200 hours of study is recommended. Parts I and II of the exam are given over the course of eight hours. When taking the tests, candidates are frequently permitted to use a GARP-approved business calculator. The candidate will receive official certification from the Global Association of Risk Professionals after passing both portions of the test and working as a financial risk manager for two years.
After a candidate achieves the status of financial risk manager, GARP offers a continuing education program. In order to keep up with market changes, professionals frequently continue their education beyond FRM certification. Because of their specialized training and skill sets, financial risk managers are highly sought after by financial firms. Because certification is so difficult to obtain, hiring managers are more likely to give it to a candidate who has it. As the risks in the global financial markets become more complex, the demand for financial risk managers is expected to rise in the twenty-first century.