Working as a certified financial risk manager can be an extremely lucrative and rewarding job, but you don’t get that position overnight – it takes hard work.
One of the things that anyone interested in such a career needs to do is register, take, and pass the FRM Exam.
If you’ve never heard of this test before, you’re probably not ready to sign up for it just yet. What is the FRM Exam and what do you need to know before you take it?
Keep reading to find out more about the FRM Exam, how you can prepare before you register, and what you need to know to pass.
Preparing for the FRM Exam
The FRM Exam is a test designed for those that are interested in becoming certified in the field of financial risk management.
If you’re reading this, it probably means that you are planning or considering a career in the financial risk field.
You may already be employed in the field and are looking for more ways to further enhance your professional opportunities. If so, a certification in financial risk management is a great next step.
This exam is offered twice a year in May and November.
It is separated into two sections (Part I and Part II) and both sections must be passed before someone can say they passed the entire FRM Exam.
Part I must be passed before Part 2, even if they are taken on the same day. If Part I is not passed, Part II won’t even be graded.
Part I is 100 multiple-choice questions and is focused on tools that are used to assess financial risk. This would include concepts like foundations of risk management or valuation and risk models.
Part II is 80 multiple-choice questions and has a focus geared toward applying the things you know. The application of the tools you tested on in Part I will be what Part II is looking at.
Passing the FRM Exam alone is not enough to get your certification in financial risk management. After you pass both sections of the test, you still need to show that you have qualified work experience.
Anyone interested in this certification needs to be able to show that they have completed 2 years of full-time professional financial risk management work.
You are not allowed to call yourself certified until you have been officially deemed certified by the Global Association of Risk Professionals (GARP).
What Do You Need to Know About the FRM Exam?
After you register, you probably feel like you need to get started with preparing for the exam right away (and you would be correct).
Here are some general things to know before you take the test that will help you get the passing score you need.
1. Test Grades
The FRM Exam will give you a pass or fail grade. GARP will email you the results of your exam about 6 weeks after you take the test.
They will provide you with the quartile results as well so that you can compare how you did on certain sections of the exam compared to other candidates.
Since the GARP grades all FRM Exams on a curve, you won’t be able to know your score before they send it to you online.
2. Identification Requirements
On test day, you have to be able to prove you are who you say you are.
You must bring a current and original government-issued driver’s license or passport. It must not be expired or replicated in any way.
The name on your admission ticket has to be the same as the name on your government-issued identification. This is important to remember when you register to be sure that the name is exactly the same.
The identification you choose to bring also has to include a photograph of you for further verification of your identity.
Exceptions to this policy do not exist. You will not be able to take the exam if you don’t have a valid driver’s license or passport, so it is important to plan accordingly.
3. Exam Deferral
If for any reason you need to defer your registration, you can do it one time and only for the next test date available.
You have to defer before the last day of registration for that exam date.
For instance, if you wanted to defer your November 2020 exam, you would need to do so before October 15, 2020 because that is the last day people can register to take it.
There is a $150 fee charged by GARP for those that must defer the exam.
4. Plenty of Study Time
Since everyone taking the exam has different levels of knowledge, skill, and experience, each person must figure out how much they personally need to study. It won’t be the same for every person.
With that being said, it is wise to spend at least 100 to 300 hours studying for each section of the exam. GARP recommends that students spend at least 200-250 hours preparing for each separate section (Part I and Part II).
There is a comprehensive study guide available for this exam, but GARP also publishes readings that students sitting this exam need to read.
The required readings come from different books and cover a variety of material.
5. Time Gap Allowed Before Certification
If you choose not to take Part II directly following the completion of Part I, you can take up to 4 years to successfully pass the second half of the exam.
After you complete both parts of the exam, you will have up to five years to finish your two-year work experience requirement for certification.
6. Scholarship Programs
If you are a student or faculty member in a GARP Academic Partner program, you may have access to scholarships that cover the FRM Part I Exam registration cost.
Only 6 students and 1 faculty member can be nominated by program administrators for this registration fee waiver each year.
If you’re interested in this option, contact the Academic Partners office through Member Services to learn more.
7. Obtaining Certification
After you are notified via email that you passed the FRM Exam Part II, you have to submit your work experience on your GARP account dashboard within five years.
Certificates are sent to candidates in the first week of each month following their approved submitted work experience.
For instance, if you submitted and got your work experience approved on June 9, 2020, your certificate would be sent to you in the first week of July 2020.
After this point, you can use your FRM designation in any written correspondence, on business cards or letterheads, and in resumes/CVs. You also have the option to opt-in to the Certified FRM Directory.
This designation adds a lot of value to your title, so it is encouraged that you use it when appropriate to signify your achievement!
Tips for Test Day
It is important that you are ready to test when the time comes and these are a few things that you can do to ensure you are performing at your best.
1. Prepare the Night Before
It is a good idea to get whatever you will need for test day together the day before. This way, you won’t have to scramble in the morning to be ready to go.
Make sure all the materials you plan to bring with you are ready before you go to sleep. Get at least 8 hours of rest to be sure your brain is functioning at its best the next day.
If you know you are a late riser, keep that in mind when setting your alarms. You don’t want to feel rushed in the morning and giving yourself buffer time is a good way to avoid this.
2. Eat a Good Meal
Whether you are taking Part I in the morning or Part II in the afternoon, you don’t want to go into the exam hungry.
Both sections of this exam are 4 hours long and without food before the test, you may find it harder to concentrate.
3. Give Yourself Some “Me Time”
If you are someone that has test anxiety, you should make sure that you allow yourself at least a little bit of time before you need to leave for the test to decompress.
Not only will this calm your nerves, but it will also help you feel more relaxed and focused going into the exam room.
While some stress may actually help you do better on the test, too much stress will make you do worse.
Prepare Today to Pass Tomorrow
The FRM Exam is meant to test your knowledge and skills in the financial risk management field so that you can be ready to tackle real-life problems in your career.
Registration for the November sitting of the exam is open on May 1, 2020.
Are you interested in learning more about finances and business? If so, check out the other articles on our website to get some more useful tips.