Career in Financial Risk Management (FRM)

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FRM

The growth in the business industry has led to the creation of a number of jobs. In the world driven by technology, the businesses have been highly influenced. The businesses are in tough combat to maintain their position in the market. To expand and increase the revenue generation, businesses take risks which can help them grow at a substantial rate or take them down, inflicting heavy losses. To help companies evaluate the risks, FRM has become immensely popular. If you are someone who has an ability to take calculated risks, then a career in financial risk management is for you. Lucrative salary packages and a dynamic work environment are characteristic to the field.

Understanding FRM

Risk Management is a part of every business nowadays and in the realm of finance, it is seen everywhere. Whether it is banks performing a credit check on a person seeking a loan or a company is planning to expand, risk management is there to be taken into consideration. Quantifying financial risks attached to a decision, risk management involves taking appropriate actions to prevent any loss to the company or an individual. Stockbrokers use financial instruments to gauge the risks. Inadequacy in risk management can result in severe repercussions for companies and individuals. Bad risk management at a macro level can topple an economy the example of which is the Great Recession in 2007. 

What Does a Financial Risk Manager Do?

A Financial Risk Manager is the ‘go-to’ professional for every company that wants to increase its revenues and clientele by taking calculated risks. The FRM professional identifies and analyzes the potential threats to the company’s assets, earning potential and the success rate of a plan. Depending on the area that professional wishes to specialize in, a variety of roles are associated with the job. Many choose to specialize in areas like credit or market risk while others may opt for liquidity risk. Working closely with the Sales, Loan Origination, Trading and Marketing teams, FRM professionals go through an array of data to analyze global market trends and forecast changes that helps a company prevent or minimize risks in advance. Devising strategies for the protection of a company’s financial losses, the professionals work towards the optimization of revenues for the company. 

Studying FRM

One way to go about studying Financial Risk Management is by taking up a degree program or a diploma while another way would be to go for the FRM exam right after your 12th class. Both paths are equally sought-after but it is important to know which one is right for you. Going for a bachelor’s degree and then applying for FRM certification paves your path to a successful career in the field. A master’s degree can add to the experience and enhance your earning potential. If you are interested in exploring the research aspect of the domain and see a career in academics, then a PhD would be the best option. 

Eligibility Criteria For FRM

If you are going for overseas education then you must know that eligibility criteria for the course may vary for different countries. Though you can start pursuing a career in the field right after the 12th class but to gain footing in the subject, a bachelor’s degree is helpful. For a master’s degree abroad, apart from having a bachelor’s degree, you are required to get a valid GMAT or GRE score. Since the courses in top universities are taught in English language, it is mandatory to take a language proficiency test. The most widely accepted tests include IELTS, TOEFL and PTE

FRM Courses Abroad

The courses in Financial Risk Management (FRM) are in high demand with many universities all over the world offering courses in the field. Depending on the country, the course duration varies from 10 months to 3 years. The courses are designed to give you world-class education gain a good understanding of the subject and also give you the hands-on training to perform the tasks efficiently.

Some of the top courses offered in FRM in countries with the best education are tabulated below:

University FRM Course Location Duration
University of Limerick  Master of Science in Risk Management and Insurance Ireland 1 Year
Trinity College Dublin  M.Sc. in Financial Risk Management Ireland 1 Year
Coventry University  Financial Risk Management MSc UK 1 Year
Birmingham City University  Insurance and Risk Management MSc UK 3 Years
University of Leeds  Financial Risk Management MSc UK 12 Months
La Trobe University  Master of Financial Analysis (Financial Risk Management) Australia 2 Years
University of New South Wales  Master of Commerce Specialization in Risk Management Australia 1.7 Years 
Pace University  Master of Science in Financial Risk Management USA 2 Years
University of Michigan – Ann Arbor  MS in Quantitative Finance and Risk Management USA 2 Years
The Ohio State University  Master of Actuarial and Quantitative Risk Management USA 2 Years
University of Toronto Master of Financial Risk Management Canada 10 Months 

FRM Certification Exam

Professionals planning to work anywhere in the world need to apply for the certification for which the exam is conducted. Providing a competitive advantage to be ahead of your peers, it also helps you to test your knowledge of the subject. The certification is provided by the Global Association of Risk Professionals (GARP) to the candidates who successfully complete this certification program. When it comes to working for the leading companies, the recruiters are very picky and they evaluate the profile of the candidates minutely. As such, there are no eligibility criteria for mentioned for the examination but it is advisable to appear in the exam after graduation. In order to be considered for the FRM certification, the candidates must qualify both Part-I and Part-II of the exam and after that should demonstrate a minimum of 2 years of work experience in the field. The exam for Part-I is conducted in May while as for the Part-II, the exam date is November of every year. The examination fee is around Rs 60,000 followed by tuition fee of Rs 50,000. Below is the paper pattern of both the exams.

Part-I

  • Quantitative Analysis
  • Fundamental Risk Management Concepts
  • Financial Markets and Products
  • Valuation and Risk Models

Part-II

  • Market Risk
  • Credit Risk
  • Operational Risk
  • Job Opportunities
  • Risk Management and Investment Management
  • Current Issues in Financial Markets

To know more, read our blog on FRM exam.

CFA vs FRM

The jobs of both Chartered Financial Analyst (CFA) and Financial Risk Manager (FRM) are equally rewarding but there is a difference in the tasks they perform. The basic difference between CFA vs FRM lies in the areas that they cover. CFA covers a broad range of areas like  Portfolio Management, Accounting, Fixed Income, Corporate Finance, Derivatives etc while as FRM is more specialized, focusing on Risk Management. The question of which among the two is best often comes up. But it completely depends on what you want. If you want to pursue a line of a profession in Investment Banking, Portfolio Management, Financial Research then CFA is right for you but if Risk Management is your aim, then you should definitely be looking for the latter. 

Career Prospects

As per various surveys, the positions in risk management are expected to grow at a fast rate over the next decade. The trends suggest that the salaries for the positions in the field are also increasing which is a good indicator for those wishing to pursue a career in FRM. The qualified professionals with a globally recognized certification have a wide range of job profiles to apply for, with each option opening up a way for a promising career. The average salary of the FRM professional in India is around 8-10 Lakh a year while as the salaries in other countries like the US and UK are substantially higher.

Some of the job roles that you can cater to include:

  • Risk Analyst
  • Risk Manager
  • Credit Risk Analyst
  • Market Risk Analyst
  • Regulatory Risk Analyst
  • Operational Risk Manager
  • Chief Risk Officer

Pursuing a career in FRM can be an exciting one. For those who don’t settle for and are always to give their skills a power boost, the career option is best for them. If you have set your mind to achieving your goal in the field, Leverage Edu can be your companion. Providing you with the best educational and career guidance, our expert career counsellors are there to ensure that you are keeping up with the pace. Everyone deserves at least a shot to launch their career, so do you. Book your 30-minute free counselling session with the industry’s leading career guidance team.

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