Difference Between FRM and PRM
FRM stands for Financial Risk Manager and it can be pursued by individuals who are willing to work as financial risk managers in the future whereas PRM stands for Professional Risk Managers and it can be pursued by students who want to become professional risk managers in the future.
FRM Certified professionals can be best fits for the Financial Risk Consultant, Risk Assessments Manager, Risk Management Analyst, Head of Treasury Department, whereas PRM Certified professionals are best suited for Predictive Analyst, Chief Risk Officer, Investment Risk Manager, and Senior Risk Analyst
Any organization must keep in mind the element of risk at every step and adopt a systematic approach to effectively managing that risk. This not only helps an organization survive but also plays a critical role in achieving sustainable growth in a continually changing business environment. This is one of the reasons why risk management has remained a field of great interest for organizations as they are increasingly keen to hire professionals with relevant knowledge, experience, and capabilities to manage different types of risk efficiently. When risk management certification, there are two key certifications to look at FRM and PRM
To get a detailed purview of both the courses, let’s look at the following sections step by step.
- What is the Financial Risk Manager?
- What is the Professional Risk Manager?
- Infographics
- Role of Risk Management Professionals
- Exam Requirements
- Why pursue FRM?
- Why pursue PRM?
What is the Financial Risk Manager (FRM)?
FRM is offered by the Global Association of Risk Professionals (GARP) for risk management professionals looking to gain expertise in risk management practices in the financial services sector.
This credential helps acquire in-depth knowledge for assessing different types of market-based and non-market financial risks and general practices in the field of financial risk management. It offers an overview of risk management practices within the financial services sector and is a globally recognized credential.
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What is the Professional Risk Manager (PRM)?
The Professional Risk Managers’ International Association (PRMIA) offers PRM certification to enhance the risk assessment and mitigating the capabilities of professionals. It is a highly acknowledged credential for risk management professionals, designed to help professionals develop a detailed understanding of financial risk management.
This certification is more focused on studying the quantitative aspect of financial risk modeling, which plays a critical role in predictive financial analysis, which helps gain an understanding of emerging risk areas and helps take suitable mitigating measures.
FRM vs. PRM Infographics
Role of Risk Management Professionals
Risk management essentially involves identifying possible risk factors and taking appropriate mitigating steps to avoid or minimize credit risks, credit risks, or other forms or risk an organization might face. No doubt, risk management professionals need to be equipped with the necessary knowledge and skills for the purpose. Many certifications can help validate their risk management skills and help keep them abreast of the latest developments in the field.
Two of the standard risk management certifications are Financial Risk Manager (FRM) and Professional Risk Manager (PRM). Both these certifications are designed to acquaint professionals with the fundamentals of risk management. Still, to make an informed choice, it would be essential to know what they offer.
Comparative Table
| Section | FRM | PRM |
|---|---|---|
| Certification Organized By | FRM is offered by GARP | PRM is offered by PRMIA |
| Number of Levels | FRM: 2 sets of papers FRM Part I: 100 Multiple choice questions FRM Part II: 80 Multiple choice questions | PRM: 4 sets of papers PRM Part I: 36 Multiple choice questions PRM Part II: 24 Multiple choice questions PRM Part III: 36 Multiple choice questions PRM Part IV: 24 Multiple choice questions |
| Mode/duration of examination | Each of FRM exams is of 4 hour duration. Both of the exams can be taken within a single day with Part I carried out in the morning and Part II carried out in the second half of the day. | Time duration for each of PRM exams is given below: Exam I: 2 Hours Exam II: 2 Hours Exam III: 1.5 Hours Exam IV: 1 Hour |
| Exam Window | In 2017, the FRM Exam will be offered on May 20, 2017 and November 18, 2017. | In 2017, the PRM Exam will be offered on: February 20 - March 17, 2017 May 22 - June 16, 2017 August 14 - September 8, 2017 November 20 - December 22, 2017 In 2018, the PRM Exam will be offered on: February 19 - March 16, 2018 May 28 - June 22, 2018 August 20 - September 14, 2018 November 19 - December 21, 2018 |
| Subjects | Part I Exam Topics: 1. Quantitative Analysis 2. Financial Markets and Products 3. Foundations of Risk Management 4. Valuation and Risk Models Part II Exam Topics: 5. Market Risk Measurement and Management 6. Credit Risk Measurement and Management 7. Operational and Integrated Risk Management 8. Risk Management and Investment Management 9. Current Issues in Financial Markets | Exam I: Finance Theory, Financial Instruments and Markets Exam II: Mathematical foundations of Risk measurement Exam III: Risk Management Practices Exam IV: Case studies, PRMIA standards of best practice, conduct and ethics, Bylaws |
| Pass Percentage | November 2016 Exams Pass Rates: FRM Part I: 44.8% | FRM Part II: 54.3% | To pass the minimum percentage you need to score is 60%. Out of all students who have got the PRM designations are 65% till now. Individual exams have pass rates between 59% to 78%. |
| Fees | New Candidate - FRM Exam Part I Early Registration Fees: December 1, 2016 - January 31, 2017 $750 Enrollment fee $400 Exam fee $350 Standard Registration Fees: February 1, 2017 - February 28, 2017 $875 Enrollment fee $400 Exam fee $475 Late Registration Fees: March 1, 2017 - April 15, 2017 $1050 Enrollment fee $400 Exam fee $650 | If you want to take PRM exam, you need to purchase a voucher. This voucher is your vehicle to scheduling your exam with the test center, Pearson VUE. Have a look at the fees you need to pay to pay to purchase the voucher. PRM Exam Voucher Bundle Price 4 PRM Exam Vouchers + Digital PRM Handbook $1200 4 PRM Exam Vouchers + Printed PRM Handbook $1350 4 PRM Exam Vouchers + Digital + Printed PRM Handbook $1400 |
| Job Opportunities/Job Titles | FRM Certified professionals can be best fits for the roles of: Financial Risk Consultant Risk Assessments Manager Risk Management Analyst Investment Banker Head of Treasury Department | PRM Certified professionals are best suited for: Predictive Analyst Chief Risk Officer Investment Risk Manager Senior Risk Analyst |
FRM vs. PRM Exam Requirements
For FRM You Need:
There are no educational requirements, but the candidate should have at least 2 years of full-time work experience related to risk management, including portfolio management, risk consulting, risk technology, or other related areas.
For PRM You Need:
The work experience requirements for PRM are based on the educational qualifications, detailed as below:
- No Bachelor’s Degree – 4 Years
- Bachelor’s Degree – 2 Years
- Post Graduation – No work experience required
- Professional Certifications including CFA or CAIA – No work experience required
Key Differences
The following are some of the key differences between the Financial Risk Manager and Professional Risk Manager :
- Different organizations offer the Financial Risk Manager and Professional Risk Manager certification. Financial Risk Manager Certification is being provided by the Financial Risk Manager (GARP), and the Professional, Risk Manager certification, is offered by the Professional Risk Manager’s International Association (PRMIA).
- The number of levels and the duration of the examination differ in both the Financial Risk Manager (FRM) and the Professional Risk Manager (PRM). In the case of Financial Risk Manager (FRM), the examination paper is divided into two parts where the first part contains 100 types of multiple-choice questions for which time duration of two hours is given, and the second part includes 80 kinds of multiple-choice questions for which also time duration of two hours is given.
In the case of the Professional Risk Manager (PRM), the examination paper is divided into four different parts. The first part contains 36 types of multiple-choice questions for which a time duration of two hours is given. The second part includes 26 kinds of multiple-choice questions for which also time duration of two hours is given; the third part contains 36 types of multiple-choice questions for which also time duration of one and a half (1.5) hours is given. Lastly, the fourth part includes 24 kinds of multiple-choice questions for which also time duration of one hour is offered. - Financial Risk Manager (FRM) is skewed more towards the regulation of the Country United States. In contrast, the Professional Risk Manager (PRM) is skewed more towards the law of the Country United Kingdom.
- The Financial Risk Manager (FRM) program certification by GARP tackles both quantitative and qualitative risk aspects. It mainly focuses on providing knowledge of managing risk in laser-focused, but in-depth ways. In contrast, the Professional Risk Manager (PRM) certification by PRMIA concentrates mostly on the quantitative aspect of the risk. It aims at enhancing the skills of the candidates in assessment and the mitigation of the risk in the financial sector.
- The results of the exam in the case of the FRM is declared generally after six weeks after the exam. In contrast, the results of the exam in the case of the PRM are generally declared after 15 days after the exam.
Why Pursue FRM?
FRM is a highly valued risk management credential, and it has been long in existence compared to PRM and has acquired industry-wide recognition over these years. Those with a fair amount of professional experience and exposure in the field of risk management are better suited for this credential as compared to those new to this specialized field.
Another point to be remembered is that FRM is more broad-based in the way it approaches the risk management areas than PRM, making it a better fit to prepare for roles like Risk Assessments Manager and Head of Treasury Department, which require broad-based knowledge of the field.
Why Pursue PRM?
PRM is undoubtedly another much-valued credential for risk management professionals and is best suited for those interested in developing expertise in the quantitative aspect of financial risk management. One of the advantages afforded is that no prior work experience in risk management is mandatory to appear for this exam.
It must be kept in mind that both these certifications share up to 80-90% of the learning areas, making it a little hard to decide which certificate should be opted for. However, PRM is slightly more technical and is more suited for individuals with a mathematical bent of mind, making it more suitable to prepare for the roles of Predictive Analyst and Risk Analyst, among others.
Conclusion
In short, both of these certifications help upgrade and validate the risk management capabilities of a professional while enhancing their potential worth in the eyes of prospective employers. Choose the one that meets your career goal. All the Best!
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