Financial Risk Manager (FRM)

Financial Risk Manager (FRM): Overview, Exams, and Career Outlook

Key takeaways
* The FRM (Financial Risk Manager) is a globally recognized certification issued by the Global Association of Risk Professionals (GARP) for professionals who identify, measure, and manage financial risk.
* Earning the FRM requires passing two exam parts and completing two years of relevant work experience.
* FRMs specialize in market, credit, operational, liquidity and other risk types; median pay for financial managers (including FRMs) was about $161,700 per year in 2024 (BLS).
* Job growth for risk management roles is strong (projected ~16% from 2022 to 2032), with demand in banking, asset management, insurance and many nonfinancial sectors.
* The FRM is more specialized than the CFA, which covers broader investment management topics.

What is the FRM?
The FRM credential, administered by GARP, certifies expertise in identifying, analyzing and mitigating financial risks. It is widely recognized across financial institutions and other industries that require systematic risk oversight.

Core responsibilities of FRMs
* Identify and assess threats to assets, earnings and business continuity (credit, market, operational, liquidity, etc.).
* Quantify and model risk exposures using statistical and financial techniques.
* Design and implement risk-mitigation strategies, limits and controls.
* Monitor market conditions and regulatory developments affecting risk profiles.
* Report findings to senior management and support risk governance.

Who hires FRMs
FRMs commonly work in:
* Commercial and investment banking
* Asset management and hedge funds
* Insurance companies
* Consulting and accounting firms
* Corporate risk teams across healthcare, technology, engineering and natural resources

Top employers (representative)
Examples of large organizations that employ many FRMs include global banks and professional services firms such as ICBC, Bank of China, HSBC, Agricultural Bank of China, Citigroup, KPMG, Deutsche Bank, UBS (including the former Credit Suisse), and PwC.

FRM exam structure and content
Requirements
* Pass two exam parts (Part I and Part II).
* Complete two years of professional work experience in financial risk management (can be verified after passing exams).

Exam format and weights
Part I — 100 questions (multiple choice)
* Foundations of risk management — 20%
* Quantitative analysis — 20%
* Financial markets and products — 30%
* Valuation and risk models — 30%

Part II — 80 questions (multiple choice; applied focus)
* 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%

Characteristics
* Exams emphasize practical, real‑world applications of risk tools and models.
* The FRM is internationally recognized (GARP’s program is accepted in many countries).

Cost and pass rates
* Enrollment fee for first-time candidates: $400.
* Registration (standard): approximately $800 per part; early registration discounts typically reduce fees to about $600 per part.
* Historical pass rates: Part I typically ~40–50% (45% in 2023); Part II typically ~50–60% (53% in 2023). Rates vary by year.

Career outlook and compensation
* Median pay for financial managers, including FRMs, was about $161,700 per year in 2024 (U.S. Bureau of Labor Statistics).
* Projected job growth for financial management and risk specialties is about 16% from 2022 to 2032, faster than average.
* FRM holders often progress into leadership roles such as chief risk officer, head of risk analytics, credit risk manager or enterprise risk manager.

FRM vs. CFA: which is right for you?
* FRM: Specialization in risk management (credit, market, operational, liquidity). Best for careers focused on managing and measuring risk across institutions and portfolios.
* CFA: Broader coverage of investment management, corporate finance, equity and fixed income analysis and portfolio management. Suited for investment analysts, portfolio managers and asset management careers.

Key differences in requirements
FRM
* Pass Part I and Part II
* Two years of relevant experience

CFA
* Pass Levels I, II and III
* Have a bachelor’s degree (or be in final year to begin the program)
* Become a CFA Institute member
* Approximately 4,000 hours of relevant work experience (varies by pathway)

Benefits of earning the FRM
* Industry-recognized specialization in risk management.
* Strong practical training in quantitative and applied risk techniques.
* Enhanced career prospects and potential for higher compensation in a growing field.
* Credibility with employers and regulators in roles that require reliable risk assessment.

Bottom line
The FRM is the industry standard for professionals focused on measuring and managing financial risk. It offers targeted training, global recognition and strong career prospects across financial and nonfinancial sectors. Choose the FRM if you seek a specialized risk career; consider the CFA if you prefer broader investment-management roles.