In the high-stakes world of risk management, two certifications, Financial Risk Manager (FRM) and Professional Risk Manager (PRM), emerge as critical passports to success. These aren’t just titles; they’re keys to unlocking global career opportunities, higher salaries, and expert status in the nuanced domain of risk.
Choosing between FRM and PRM goes beyond mere certification—it’s about aligning with your career aspirations and unlocking doors to future opportunities.
This blog cuts through the complexity, offering a side-by-side comparison of FRM and PRM on essential aspects like eligibility, costs, career paths, and more. Whether you’re a budding professional or aiming to climb higher, our concise analysis will guide you towards the certification that best fits your professional journey.
Dive in as we simplify the choice between FRM and PRM, paving your way to informed decision-making in the world of risk management.
What is FRM?
The Financial Risk Manager (FRM) certification, awarded by the Global Association of Risk Professionals (GARP), is a globally recognized credential for finance professionals aiming to specialize in risk management. It validates an individual’s expertise in managing market, credit, operational, and investment risk.
The FRM certification requires passing two challenging exams on risk management concepts and two years of relevant work experience. It’s crucial for those looking to deepen their risk knowledge, boost job prospects, and earn expert status.
FRM opens global opportunities in banking, asset management, insurance, and consulting, showcasing holders’ proficiency in financial risk.
To know more about FRM as a course, read – All About FRM
What is PRM?
The Professional Risk Manager (PRM) certification by the Professional Risk Managers’ International Association (PRMIA) is a leading credential for risk management professionals. It signifies expertise in risk management through a curriculum that spans finance theory, financial instruments, and risk management practices.
The PRM program is modular, consisting of four exams that candidates can take in any order, providing flexibility and allowing focus on areas most relevant to their career goals. This certification is valued across the financial industry for its comprehensive approach to equipping professionals with the skills to assess and mitigate financial risks effectively.
Earning the PRM designation marks a professional’s deep understanding of risk management, opening doors to advanced career opportunities in banks, investment firms, and financial institutions globally.
Comparison on the Basis of Various Criteria
FRM Enrollment Eligibility
- No formal educational or professional prerequisites required.
- Open to all individuals interested in risk management, regardless of their current profession or educational background.
PRM Enrollment Eligibility
- Likewise, no specific educational or professional background needed to register for exams.
- Designed to be accessible to professionals at any stage of their career, including those new to risk management.
Program Completion Requirements
FRM Completion Requirements
- Pass Two Exams: Candidates must pass two sequential exams, known as Part I and Part II, which cover a broad range of risk management topics.
- Work Experience: After passing the exams, candidates need to demonstrate two years of relevant work experience in the field of risk management. This requirement ensures that FRM holders not only have theoretical knowledge but also practical experience.
- Continuous Professional Development: FRM certification holders are encouraged to participate in professional development activities to stay current in the field, although this is not a formal requirement for maintaining the certification.
PRM Completion Requirements
- Pass Four Exams: PRM candidates are required to pass four exams. These exams can be taken in any order, offering flexibility to the candidates. The exams cover risk management theory, financial theories, financial instruments, and a mathematical foundation of risk measurements.
- Flexible Experience Requirement: Unlike FRM, PRM does not explicitly require candidates to have a certain amount of work experience to complete the certification. However, having professional experience can certainly help in understanding the complex concepts covered in the exams.
- Membership and Ethics: PRM candidates must agree to adhere to the PRMIA Code of Conduct, emphasizing the ethical standards in the profession. Continuous membership with PRMIA is encouraged to access resources and maintain the certification’s validity.
FRM Exam Structure
- Two-Part Exam: The FRM certification consists of two exams, Part I and Part II, which must be taken in sequence.
- Part I focuses on the tools and concepts of risk management, quantitative analysis, financial markets and products, and valuation and risk models.
- Part II delves into the application of the tools acquired in Part I, covering market risk, credit risk, operational and integrated risk management, risk management and investment management, and current issues in financial markets.
- Format: Each part of the FRM exam is multiple-choice, with Part I containing 100 questions and Part II containing 80 questions. The exams are offered in May and November each year.
PRM Exam Structure
- Four Exams: The PRM certification is divided into four exams, which can be taken in any order, providing flexibility to the candidates.
- Exam I covers theory of finance, Exam II focuses on mathematical foundations of risk measurement, Exam III addresses risk management practices, and Exam IV tests knowledge on financial instruments, markets, and trading strategies.
- Format: The exams are computer-based and can be scheduled throughout the year at approved testing centers. The number of questions varies by exam, ranging from 24 to 36, with a focus on both theoretical and practical aspects of risk management.
Duration and Flexibility
FRM Duration and Flexibility
- Fixed Exam Windows: The FRM exams are offered twice a year, in May and November, requiring candidates to align their preparation with these fixed dates.
- Sequential Exams: Candidates must first pass Part I before moving on to Part II, which can lengthen the certification process depending on the individual’s success in passing each part.
- Duration: Most candidates take between 1 to 2 years to complete both parts of the FRM exam, considering study time and the scheduling of exams.
- Flexibility: While the fixed exam dates may limit flexibility, the global availability of exam centers can make access easier for candidates worldwide.
PRM Duration and Flexibility
- Year-Round Exams: PRM exams can be taken at any time throughout the year, offering candidates the ability to schedule exams when they feel most prepared.
- Non-Sequential Exams: The PRM program allows candidates to take the four exams in any order, providing the flexibility to start with the topics they’re most comfortable with or that align with their current knowledge.
- Duration: The completion time for PRM can vary widely but could be faster than FRM due to the flexibility in exam scheduling. Some candidates may complete all four exams within a few months, depending on their preparedness and availability.
- Flexibility: The ability to schedule exams at any point and in any order makes PRM highly flexible and accommodating to professionals’ busy schedules.
FRM Program Costs
- Enrollment Fee: The FRM program includes a one-time enrollment fee when you register for the Part I exam, typically around INR 30,000 to INR 40,000.
- Exam Fees: Each part of the FRM exam costs approximately INR 40,000 to INR 50,000 if registered early, with fees increasing closer to the exam date.
- Membership Fee: Optional GARP membership fees add approximately INR 5,000 to INR 10,000 annually.
- Minimum Estimated Total Cost: Including the enrollment fee, exam fees for both parts, the lower end of study materials, and optional GARP membership, the minimum estimated total cost for the FRM program can range from approximately INR 1,42,000 to INR 2,00,000.
PRM Program Costs
- Exam Fees: Each of the four PRM exams has a fee, with the total cost for all exams if registered early ranging from INR 80,000 to INR 100,000. Individual exam fees allow for spreading out the cost.
- Membership Fee: PRMIA membership, while optional, costs about INR 5,000 to INR 10,000 annually, providing access to additional resources.
- Minimum Estimated Total Cost: The minimum total cost ranges from approximately INR 82,000 to INR 105,000, not including the optional membership fee.
FRM Salary Prospects
- Entry-Level: For those just starting their careers or with less than 2 years of experience, FRM certification can lead to starting positions with salaries ranging from approximately INR 6 lakhs to INR 12 lakhs annually.
- Experienced: With 5-10 years of experience, FRM holders can expect to see their salaries grow significantly, potentially ranging from INR 15 lakhs to over INR 30 lakhs annually, especially in roles with greater responsibility or in high-demand sectors.
- Average: On average, FRM certified professionals might earn somewhere in the range of INR 12 lakhs to INR 18 lakhs annually, with considerable variation based on factors like location, industry, and specific job function.
To get more insight into the salary prospects and career opportunities for FRM professionals, read – FRM Salaries, Career Opportunities
PRM Salary Prospects
- Entry-Level: PRM certification can also boost the starting salaries of risk management professionals, with entry-level positions typically offering salaries from INR 5 lakhs to INR 10 lakhs per year.
- Experienced: Professionals with the PRM designation and 5-10 years of experience can see salaries in the range of INR 14 lakhs to INR 28 lakhs annually, depending on their role and the company’s size and sector.
- Average: The average salary for PRM certified individuals might fall between INR 10 lakhs to INR 15 lakhs annually, reflecting a broad spectrum of roles and industries where the certification is valued.
FRM Career Opportunities
- Risk Analyst: Analyzing potential risks to the assets, earning capacity, or success of organizations in the financial industry.
- Credit Risk Specialist: Focusing on assessing and managing the risks of loss from borrowers failing to repay loans or meet contractual obligations.
- Market Risk Consultant: Specializing in the risks associated with market environments and the impact of market movements on investment portfolios.
- Operational Risk Manager: Addressing risks that stem from internal processes, systems, and people, or from external events affecting operations.
- Regulatory Compliance Officer: Ensuring that financial practices and transactions meet regulatory requirements to mitigate legal and compliance risks.
- Chief Risk Officer (CRO): Leading the risk management department and setting the organization’s risk management strategy.
PRM Career Opportunities
- Financial Analyst: Evaluating businesses, projects, budgets, and other finance-related entities to determine their performance and suitability for investment.
- Portfolio Manager: Making investment decisions and implementing risk management strategies to manage investment portfolios effectively.
- Trading Strategist: Developing and applying trading strategies based on market analysis and risk assessment to maximize financial returns.
- Risk Management Consultant: Providing advisory services to firms on how to identify, assess, and prioritize risks.
- Insurance Risk Manager: Analyzing and managing risks related to insurance policies and ensuring the financial health of insurance companies.
- Enterprise Risk Management (ERM) Specialist: Overseeing risk management processes across an organization to identify and mitigate risks that could impact the company’s reputation, safety, security, and financial well-being.
Global Reach and Opportunities
FRM Global Reach and Opportunities
- Widespread Recognition: The Financial Risk Manager (FRM) certification by GARP is globally esteemed for its thorough risk focus. It stands out in key financial cities: New York, London, Hong Kong, and Singapore.
- International Career Paths: FRM holders often find opportunities in multinational banks, investment firms, and financial services companies. The certification is particularly valued in roles that require a deep understanding of market, credit, and operational risks on a global scale.
- Networking and Professional Growth: GARP provides FRM holders with access to a global network of professionals, ongoing educational opportunities, and resources to stay updated on global risk management practices and trends.
PRM Global Reach and Opportunities
- Broad International Acceptance: The Professional Risk Manager (PRM) certification by PRMIA is globally recognized, especially in Europe, North America, and Asia. It’s valued for its wide use across financial sectors.
- Versatile Career Opportunities: Professionals with PRM certification can leverage their skills in a wide range of financial institutions, including banks, insurance companies, corporate finance, and consulting firms.
- Global Community and Support: PRMIA provides a supportive global network for PRM holders, offering educational resources, industry updates, and networking opportunities to foster professional development in any market.
FRM Program Difficulty
- Exam Content and Structure: The FRM program consists of two parts, each covering a comprehensive range of topics related to risk management, including quantitative analysis, risk modeling, and market and credit risk. The breadth and depth of material in the FRM exams require a strong foundation in mathematics and finance.
- Pass Rates: Historically, FRM exam pass rates, typically 40-50% for Part I and slightly higher for Part II, indicate a moderate to high difficulty, with many not passing on their first try.
- Study Time: Candidates typically need to invest a substantial amount of time in studying to pass the FRM exams, with recommendations often exceeding 300 hours of study per part.
To get more insight into the difficulty of FRM exams, read – Is FRM Difficult?
PRM Program Difficulty
- Exam Content and Flexibility: The PRM certification involves four exams that cover a wide range of risk management topics, including finance theory, risk measures, and financial instruments. The exams are designed to be taken in any order, allowing candidates to approach the program in a way that best suits their strengths and knowledge gaps.
- Pass Rates: The PRM exams also have a reputation for being challenging, though specific pass rates are less frequently published by PRMIA.
- Study Time: While the total study time for PRM certification can vary depending on the individual’s background and the order in which they take the exams, it is generally comparable to the FRM, with candidates often investing several hundred hours of study to prepare for all four exams.
FRM Future Prospects
- Technological Specialization: FRM professionals are poised to excel in areas like cyber risk and quantitative analysis, where technology plays a significant role. Their expertise is critical as financial institutions increasingly rely on data analytics and sophisticated models.
- AI Adaptation: The FRM’s quantitative focus prepares professionals to integrate AI tools in risk assessment, making them essential in an AI-driven financial sector.
- Global Economic Expertise: FRM holders are equipped to navigate financial market complexities, making strategic decisions amidst economic fluctuations and regulatory shifts.
PRM Future Prospects
- Versatility Across Sectors: PRM’s broad curriculum ensures adaptability across the diverse, digitally transforming financial services landscape, preparing professionals for the future of finance.
- Emerging Technologies: PRM certification encompasses a holistic understanding of risks associated with technological advancements, positioning holders to manage risks in organizations leveraging new tech for a competitive edge.
- Holistic Global Strategy: With a comprehensive approach to risk, PRM professionals are prepared to address a wide array of global uncertainties, from economic downturns to geopolitical risks.
|Eligibility to Enroll
|No formal prerequisites
|No formal prerequisites
|Program Completion Requirements
|Pass two exams, demonstrate two years of relevant work experience
|Pass four exams, no specific work experience required for certification
|Two-part exam, sequential
|Four exams, can be taken in any order
|Duration and Flexibility
|Fixed exam windows, sequential exams may extend completion time
|Exams can be taken year-round, offering more flexibility in scheduling
|Program Costs (estimated)
|INR 1,42,000 to INR 200,000
|INR 82,000 to INR 1,05,000
|Higher earning potential in specialized risk management roles
|Competitive in a wide range of financial services roles
|Specialized roles in risk management within finance and banking
|Broad applicability across various financial services sectors
|Global Reach and Opportunities
|Highly regarded in major financial hubs worldwide
|Recognized globally, with broad applicability across financial services
|Considered challenging, especially in quantitative sections
|Broad coverage of topics, perceived as slightly less quantitative than FRM
|Specialization in high-tech environment and adaptation to AI and global economic fluctuations
|Versatility across evolving financial services, integration with emerging technologies, resilience in facing global challenges
Making the Right Choice
Deciding between the Financial Risk Manager (FRM) and Professional Risk Manager (PRM) certifications is a pivotal moment in a finance professional’s career. Each path offers distinct advantages and caters to different career aspirations within the vast landscape of financial risk management. Here are some considerations to help you make an informed decision:
Assess Your Career Goals
- If you aim to specialize in risk management within the banking and finance sectors, FRM’s in-depth focus aligns with this goal.
- Conversely, if you prefer a broader perspective that applies across various financial services, PRM’s wide applicability might be more suitable.
Consider Your Professional Background
- If you have a strong quantitative background or seek to develop in-depth quantitative analysis skills, FRM’s rigorous curriculum caters to this requirement.
- For those with a more diverse skill set or interests that span beyond quantitative analysis, PRM offers a broader curriculum that covers a wide range of risk management topics.
Evaluate Program Structure and Requirements
- Consider how the structure of each program fits with your current lifestyle and commitments. PRM’s flexibility in exam scheduling and the order of exams might be better for those with unpredictable schedules, while
- FRM’s structured path could suit those who prefer a sequential learning process.
Reflect on Global Opportunities and Trends
- Both certifications are globally recognized, but it’s worth considering where you plan to work or the regions where each certification is more renowned.
- Additionally, think about how each program incorporates current trends, such as AI and global economic challenges, into their curriculum and how this aligns with future career opportunities.
Financial Investment and ROI
- Weigh the total cost of each program against the potential salary increase and career advancement opportunities it may bring.
- Consider not only the monetary investment but also the time and effort required to achieve certification.
Seek Advice and Research
- Engage with current holders of each certification to gain insights into their experiences and how the certification has impacted their careers.
- Explore forums, LinkedIn groups, or local chapters of professional organizations to connect with peers and industry professionals.
Choosing between the Financial Risk Manager (FRM) and Professional Risk Manager (PRM) certifications marks a pivotal moment in your finance career. It’s not just a decision—it’s a direction.
Opt for FRM for its in-depth specialization in finance and risk, or choose PRM for its wide-ranging flexibility across financial services. Each path offers unique advantages tailored to different professional aspirations.
Embrace the journey that best aligns with your goals, and let your chosen certification propel you forward. Whether you’re diving deep into risk management with FRM or navigating a broad spectrum of finance with PRM, your future in finance looks promising.
Step confidently into your next chapter, equipped with a certification that opens doors and sets the stage for success. The world of finance awaits, and with FRM or PRM, you’re ready to make your mark.
Frequently Asked Questions
Both are challenging and require a significant commitment to study. FRM may have a more quantitative focus, while PRM covers a broad range of topics.
Both are globally recognized, but FRM may have a slight edge in specialized financial risk management roles.
Total costs including study materials and exam fees can range from INR 95,000 to INR 200,000 for FRM and INR 105,000 to INR 215,000 for PRM, approximately.