“Financial Risk Management Career Paths: Opportunities and Challenges”

A Basic Overview of Financial Risk Management Course

Financial Risk Management involves identifying, analysing, and mitigating potential financial risks within a business.

Credit, Market, and Operational risks are the three primary risks involved in any business. Financial Risk Managers assess and analyse these risks to develop strategies for managing or reducing them.

The course helps to provide a comprehensive understanding of these risks and the tools and techniques available to manage them effectively.

Career Scope in Financial Risk Manager

career & Scope of financial risk management

Financial Risk Management course have gained worldwide popularity since its inception in 1997. Financial Risk Managers (FRMs) have risk assessment and management expertise and are commonly employed by large banks, insurance companies, accounting firms, regulatory agencies, and asset management firms.

Role & Responsibilities of Financial Risk Manager

Financial Risk Managers (FRMs) assess risk by examining financial markets and global conditions to forecast fluctuations or patterns. They are responsible for developing strategies to mitigate potential risks.

The roles of a Financial Risk Manager can be categorised into four major categories.

  • Market Risk Specialists: They analyse external risk factors that may impact a company’s market position.
  • Credit Risk Managers: They analyse potential risks to the company related to customer payment defaults or non-payment for goods and services.
  • Regulatory Risk Managers: Analyse new and proposed legislation to assess potential impacts on the organisation and ensure adherence to regulations.
  • Operational Risk Managers: Analyse risk factors associated with internal process failures, system malfunctions, and employee fraud.

Employment Scope Career Options for Financial Risk Managers

Financial Risk Managers have specialised skills and expertise in risk assessment and management, leading to a wide range of career opportunities.

FRMs work in various sectors, including investment banks, commercial banks, financial institutions, insurance companies, credit rating companies, consulting firms, and asset management firms.

  • Top companies that recruit FRMs include HSBC, Deutsche Bank, PWC, Credit Suisse, ICBC, Citigroup, Deloitte, Paypal, KPMG, UBS, etc.
  • Top Banks that recruit FRMs are JP Morgan Chase, Deutsche Bank, Wells Fargo, Bank of China, Bank of America, Banco Santander, Reserve Bank of India, HSBC, Bank of India, Axis Bank, etc.

Career Scope for Financial Risk Manager in Govt & PSU Sector

Financial Risk Managers also have the opportunity to work in government and public sector undertakings (PSUs). Government organisations, such as central banks, regulatory bodies, and ministries, require financial risk managers to assess and manage risks associated with their financial operations.

PSU also hires Financial Risk Managers to maintain financial stability and regulatory compliance. They have a key role in managing public funds, analysing risks related to government investments, and maintaining financial accountability.

Salary Range

Salary range of financial risk management course

The level of experience often determines the salary of a Financial Risk Manager (FRM). The average FRM’s salary in India ranges between 4 to 15 lacs.

However, you can earn more depending on your expertise, skills, and the organisation you work for. 

How to Become a Financial Risk Manager?

In order to obtain the FRM designation, candidates must possess a bachelor’s degree and a minimum of two years of work experience in a related field such as finance, banking, or insurance. For those lacking the required work experience, there is no need for concern. You have the option to take the FRM Exam and then have four years to fulfil the necessary work experience.

Most importantly, FRMs need to be accredited by the Global Association of Risk Professionals (GARP).

Candidates seeking the FRM designation are required to pass a two-part exam and gain two years of work experience in financial risk management.

The FRM program covers key strategic disciplines in risk management, including market risk, operational risk, credit risk, and investment management. The exam is internationally recognised and assesses a Financial Risk Manager’s proficiency in handling risks on a global scale.

There are numerous online finance courses and training available to assist in preparation for these examinations.

To maintain your FRM certification, you must complete at least 20 hours of continuing professional education (CPE) annually and pay the necessary maintenance fee. This is an ongoing process, and you need to continuously stay informed about the latest advancements in finance and risk management.

Key Skills Required to Become a Financial Risk Manager

key skill of financial risk management

To become a Financial Risk Manager, one must possess technical expertise, analytical skills, and industry knowledge. A comprehensive knowledge of financial markets, risk assessment techniques, and regulatory frameworks is necessary to ensure informed decision-making.

Additionally, strong analytical and numerical skills, good communication skills, financial modeling, critical thinking, attention to detail, and problem-solving skills are equally crucial.

Eligibility Criteria for Financial Risk Management Course

There are no specific eligibility requirements for FRM students. Even final-year graduation students are eligible to take the FRM Part I exam. In addition to completing both levels of the FRM certification, candidates should possess a minimum of two years of work experience and maintain an active membership with Global Association of Risk Professionals (GARP).

Students need to research the eligibility requirements for gaining FRM admission. The eligibility requirements for the FRM course are straightforward, facilitating students’ pursuit of this field.

Exam Pattern for Financial Risk Management Course

The FRM Exam consists of two parts, each lasting four hours, and covers topics such as financial markets and products, quantitative analysis, and credit risk management.

It is offered twice a year, in May and November. Applicants must complete an application and pay a fee to register. Registration for the exam can be done online, allowing you to select the testing center that best suits your needs.

The FRM Exam is conducted online, and a minimum score of 70% is required to pass each section. The exam can be retaken during the next testing window, if you fail to pass in the first attempt.

The good part is there is no negative marking in the exam. Part I consists 100 multiple-choice questions, whereas Part II has 80 multiple choice questions.

 

Topics Covered in The FRM Exam

Part I assesses your understanding of risk management tools.The topics and their corresponding weights are listed.

Topics

Weightage in Exam

Foundations of Risk Management

20%

Quantitative Analysis

20%

Financial Markets and Products

30%

Valuation and Risk Models

30%

 

 

 

Topics of Part II focuses on applying the tools introduced in Part I.

Topics

Weightage in Exam

Market Risk Measurement and Management

20%

Operational Risk and Resiliency

20%

Credit Risk Measurement and Management

20%

Liquidity and Treasury Risk Measurement and Management

15%

Risk Management and Investment Management

15%

Current Issues in Financial Markets

10%

 

 

Top Institutes Offering Financial Risk Management Courses

FRM courses are available for study in both India and abroad. The certification is recognised globally, allowing students to pursue it internationally. Students can study FRM in various universities worldwide, including Canada, London, and Australia.

Listed below are popular institutes in India that offer coaching for the FRM course to aspiring candidates.

  • GITAM Institute of Management – Visakhapatnam,
  • Global Risk Management Institute – Gurgaon,
  • Amity University – Noida,
  • CMJ University – Shillong,
  • ‘Jain Deemed to be University – Bangalore,
  • Arunodaya University – Itanagar, etc.

Fees for Financial Risk Management Course

fees of financial risk management

The average FRM course fees in India range from Rs. 30,000 to 1 lac. It depends on the institute, course duration, and study materials provided.

In addition, students should also take into account exam registration fees, study material costs, and membership fees for GARP.

Conclusion

Becoming a Financial Risk Manager is a challenging yet rewarding career path that requires dedication, hard work, and continuous learning. Acquiring the FRM designation and accumulating financial risk management experience can lead to lucrative opportunities in the finance industry.

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