FRM vs PRM

Difference Between FRM and PRM

FRM stands for Financial Risk Manager and is pursued by individuals who want to make a career as a Financial Risk Consultant, Risk Assessments Manager, Risk Management Analyst, Head of Treasury Department. Whereas, PRM stands for Professional Risk Managers and is pursued by students who want to become Predictive Analyst, Chief Risk Officer, Investment Risk Manager, and Senior Risk Analyst.

FRM-vs-PRM

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To get a detailed purview of both the courses, let’s look at the following sections step by step.

  1. What is the Financial Risk Manager?
  2. What is the Professional Risk Manager?
  3. Infographics
  4. Role of Risk Management Professionals
  5. Exam Requirements
  6. Why pursue FRM?
  7. 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.

What is the Professional Risk Manager (PRM)?

The Professional Risk Managers’ International Association (PRMIA) offers PRM certification to enhance risk assessment and mitigation knowledge. 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 understand emerging risk areas and helps take suitable mitigating measures.

FRM vs PRM Infographics

FRM-vs-PRM-info

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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.

FRM Vs PRM – Comparative Table

SectionFRMPRM
Certification Organized ByThe exams are conducted by the Global Association of Risk Professionals (GARP), USAThe exams are organized by the Professional Risk Managers’ International Association (PRMIA), USA
PatternThe course is divided into 2 parts
• Part I
• Part II
In 2019, it shifted to a 2-exam format as compared to a 4-exam format of 2015
• Exam 1 (similar to Exam I and II of 2015 PRM exams)
• Exam 2 (similar to Exam III and IV of 2015 PRM exams)
Duration of courseA candidate must clear Part II within 4 years of passing Part I.A candidate has to complete all the parts in 3 years or within 2 years from the day of the first successful exam.
SyllabusThe core curriculum includes
• Quantitative Analysis
• Valuation
• Risk Models
• Financial Markets And Products
• Credit Risk
• Market Risk
• Operational Risk & Resiliency
• Investment Management
• Treasury & Liquidity Risk Management
• Current Issues In Financial Markets
The course covers the following
• Financial Markets
• Risk Management Frameworks & Operational Risk
• Credit Risk & Counterparty Credit Risk
• Mathematical Foundations of Risk Measurement
• Asset Liability Management
• Funds Transfer Pricing
• PRMIA Standards and Governance


Exam FeesThe overall cost includes an enrollment fee of $400 and exam fees that vary as follows:

• Part I: $425 (Early registration), $550 (Standard registration) and $725 (Late registration)
• Part II: $350 (Early registration), $475 (Standard registration) and $650 (Late registration)
The overall cost of PRM designation is $1,430, which includes a program fee of $1,080, an application fee of $150 and membership fee of $200.
JobsSome of the common profiles include

• Risk Assessment Manager
• Financial Risk Consultant
• Investment Banker
• Risk Management Analyst
Some of the common profiles include

• Risk Officer
• Predictive Analyst
• Investment Risk Manager
• Risk Analyst
DifficultyIt is very difficult as only 1 out of every 3 candidates clear both exams. During 2019, the pass rate for Part I and Part II were 45.9% and 58.6% respectively.It is moderately difficult with a historical pass rate of ~65%. The pass rates of the individual parts vary in the range of 59% to 78%. [Source: PRMIA]
Exam DateUpcoming exam schedule for 2021

• Part I: May 08-21, Jul 10-23, and Nov 13-26 (all computer-based)
• Part II: May 15 (paper-based) and Dec 04-10 (computer-based)
Upcoming exam schedule for 2021

• Feb 15 – Mar 12
• May 24 – Jun 18
• Aug 16 – Sep 10
• Nov 15 – Dec 18

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

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 risk management are better suited for this credential than 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 Predictive Analyst and Risk Analyst’s roles, 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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Reader Interactions

Comments

  1. AvatarDomnic Talon says

    Thanks for sharing this guide. I want to opt my career in risk management profile but I was little confused in FRM and ERP i.e energy risk management. So if you could clear my doubts and make it easy to choose my career between these two areas.

    • Dheeraj VaidyaDheeraj Vaidya says

      My pleasure!! If you are planning to pursue your career in risk management in either of these areas, ie FRM and ERM then you must read this article FRM VS ERP.This will help you with detailed information about both these credentials.

  2. AvatarTyler Smith says

    Once again you are here with an amazing blog. I must appreciate your hard work. Thanks for this great comparison. I again have a small question for you; can you tell me is work experience required before giving FRM exam?

    • Dheeraj VaidyaDheeraj Vaidya says

      Thank you so much. You don’t need any educational or professional prerequisites to sit for the either part of FRM exam. However, to become FRM certified, you need to have at least 2 years of relevant work experience. All the best and happy learning!!

  3. Avatarsamuel says

    Hi Dheeraj,

    I have done my cfa from icfai and now I am perusing my cima. Can you help me how to learn the practical way of analysis the market and which books will i have to reed.

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