In order to become a financial risk manager (FRM), a person must first receive certification from the Global Association of Risk Professionals (GARP). To receive FRM certification, a candidate must pass a two-part exam administered and approved by GARP. Candidates often fail to pass Part I or Part II of the certification exam, and GARP estimates that there are only 24,000 Certified FRM holders in the world as of 2011. After passing both portions of the exam, the candidate must then gain two years of experience in a financial field such as economics, portfolio management, academic research, auditing or risk consulting.
A person can enroll in a course of study through an approved financial institute in order to prepare for the certification exam to become a financial risk manager. They can only register to take the exam through the Global Association of Risk Professionals office in New York. It is often recommended that a person should undergo 150 to 200 hours of study in order to pass Part I of the exam. Part I of the test covers the applicant’s knowledge of quantitative analysis, foundations of risk management, financial markets and products, and valuation and risk modules. This portion of the test often contains hypothetical market risk problems that the candidate must analyze and solve.
Part II of the exam to become a financial risk manager covers market and credit risk measurement and management, operational and integrated risk management, investment management, and current issues in global financial markets. An additional 150 to 200 hours of study is recommended to prepare for this portion of the exam. Part I and II of the exam are administered over an eight-hour period. Candidates are often allowed to use a GARP-approved business calculator when taking the tests. Upon receiving a passing score on both portions of the test and completing two years of work as a financial risk manager, the candidate will receive official certification from the Global Association of Risk Professionals.
GARP also offers a continuing education program for after the candidate manages to become a financial risk manager. Professionals often continue their education beyond FRM certification, in order to keep up with market changes. Financial risk managers are highly sought after by financial firms, because the training and skill sets they possess are so specialized. Because of the difficulty of earning certification, hiring managers are more likely to give preference to a candidate who has attained it. The demand for financial risk managers is expected to grow into the 21st century, as the risks within the global financial markets become more complex.