Risk Management Basics
- Derivatives Basics
- Put-Call Parity
- Forwards vs Futures
- Forward Rate Formula
- Cash Settlement vs Physical Settlement
- Backwardation vs Contango
- Residual Risk
- Best Futures Books
- Futures vs Options
- What are Options in Finance?
- Options Trading Strategies
- Call Options vs Put Options
- Options vs Warrants
- Writing Call Options
- Writing Put Options
- Gamma of an Option
- Options Trading Books
- International Option Exchanges
- Interest Rate Derivatives
- Interest Rate Swap
- Random vs Systematic ErrorÂ
- Equity Strategies
- Swaps in Finance
- Embedded Derivatives
- Commodity Derivatives
- Commodity Risk Management
- Managed Futures Strategy
- Top 7 Best Books on Derivatives
- Structured Finance Jobs
- Commodities Trading Books
- Best Commodities Books
- Fixed Income
- Equity Research vs Credit Research - Know the difference!
- Credit Analysis | What Credit Analyst Look for? 5 C's | Ratios
- Yield Curve Slope, Theory, Charts, Analysis (Complete Guide)
- Bond Pricing
- Coupon Bond
- Coupon Bond Formula
- Zero Coupon Bond
- Duration Formula
- Coupon Rate Formula
- Carrying Value of Bond
- Sinking Fund Formula
- Coupon Rate of a Bond
- Treasury Bills vs Bonds
- Coupon vs Yield
- Coupon Rate vs Interest Rate
- Credit Rating Process | A Complete Beginner's Guide
- Asset Backed Securities (RMBS, CMBS, CDOs)
- Loss Given Default - LGD | Examples, Formula, Calculation
- Top 7 Best Fixed Income Books
- ABS and MBS Index | Complete Beginner's Guide
- Top 10 Best Treasury Management Book
- Top 10 Best Credit Research Books
- Convexity of a Bond | Formula | Duration | Calculation
- Payment in Kind Bond | PIK Definition | Interest | Example
- Subordination Debt | Meaning | Example | Types | Risks
- Top 10 Best Books - Bonds Market, Bond Trading, Bond Investing
- Bonds vs Debentures
- Secured vs Unsecured Loan
- Bills of Exchange vs Promissory Note
- Bills of Exchange | Meaning | Examples | Top Features
- Promissory Notes
- Secured Loans
- Unsecured Loans
- Subordinated Debt
- Fallen Angel
- Bond Equivalent Yield Formula
- Junior Tranche
- Credit Analyst Interview Questions and Answers
- Debt Covenants | Bond Covenant Examples | Positive & Negative
- Credit Analyst Career
- Negative Covenants (Restrictive)
- Sinking Fund
- Bond Sinking Fund
- Negotiable Instruments
- Credit Spread
- Bond Pricing Formula
- Risk Management Careers
- Complete Beginner's Guide to CRM Exam
- How to Become a Quantitative Financial Analyst
- Risk Management Certifications and Salary
- Financial Engineering Career Guide: Program, Jobs, Salary
- Quantitative Analyst Salary | Skills | Trends | Top Employers
- Certificate in Quantitative Finance (CQF) Exam Guide
- Relative Risk Reduction Formula
Top Risk Management Certifications
If you’re someone who aspires to be a risk management professional, this article will be of great help. Because in this article we will focus on the compensation and career prospects of risk management certifications. All you have to do is to read and understand how you can implement this information in your professional life.
To give you a brief sequence of the article, here’s what we would articulate below. We will talk about the most important certifications of risk management and along with discussing the career prospects we will emphasize on the compensation in detail.
Let’s jump in.
- Financial Risk Managers (FRM)
- Professional Risk Managers (PRM)
- Chartered Enterprise Risk Analyst (CERA)
- Certified Risk Managers (CRM)
- Risk Managers’ Salary
- Risk Management Analysts’ salary
- Other risk management jobs and compensations
#1 – Financial Risk Managers (FRM)
FRM exam is a globally recognized risk management certification that’s hugely popular. If you’re looking for FRM certification, you should know few details before you take the plunge. Moreover, if you don’t know about the career prospects and the compensation you would get as you complete your FRM certification, it doesn’t make any sense to do the certification.
FRM is a global risk management certification offered by GARP (Global Association of Risk Professionals). To become a certified FRM professional, you need to clear FRM-I and FRM-II exams as well as you need to have 2 years of relevant work experience.
FRM Career Prospects
To give you a glimpse of what FRM certification can do for you, here’re the top 10 employers who hire FRMs (banks and companies) –
source – GARP
As the exams are easier than the depth of the curriculum, you aim to focus more on the curriculum than the exams. Often interviewers check for knowledge base of FRM professionals during interviews.
After becoming FRM certified, you would be able to pursue the following careers –
- Risk Manager (Personal Banking)
- Credit Risk Specialists
- Operational Risk Analysts
- Risk Management Analysts
- Enterprise Risk Manager
- Commercial Risk Manager
Once you complete your FRM certification, the compensation is very lucrative. Have a look at the chart below to get a concrete idea about what to expect in terms of compensation.
source : payscale.com
Have a look at the detailed stats below to have an idea what degree/certification you can go for along with FRM to get a better compensation in risk management.
source : payscale.com
#2 – Professional Risk Managers (PRM)
PRM is one of the most sought after globally recognized, graduate-level risk management certification. It’s recognized by The Professional Risk Managers’ International Association (PRMIA). If you’re looking for a risk management career, it’s the go-to course for you.
The eligibility criteria of PRM are set in different manner. If you don’t have a bachelor degree, you need to have 4 years of work experience. If you complete your bachelor degree course, you need 2 years of work experience. If you’re done with MBA/MSF/MQF/CFA, you don’t need to have any experience requirement for the course.
PRM Career Prospects
PRM has very good job prospects if you study hard. Moreover, the examinations of PRM are also very strict as if you don’t score 60% or above, you won’t be able to qualify. Let’s have a look at the job prospects –
So you can see that once you complete your PRM certifications, you can reach the level of President or Director as well; of course you need to consider the years of experience before reaching those designations.
Here’s a list of designations you can avail after you get your PRM certification.
- Risk Manager
- Associate – Market Risk
- Research Analyst
- Risk Analyst
- Transaction Risk Manager
The salary range of PRM certification is pretty good compared to other certifications. If you have 1 to 4 years of experience, you would be able to get around US $82,424 per annum and if you have 5 to 9 years of experience, you would be able to get around US $110,000 per annum according to Payscale.com. Let’s have a look at the chart below –
Let’s also look at the key stats for PRM designation –
#3 – Chartered Enterprise Risk Analyst (CERA)
If you’re looking something that is a bit different than the usual risk management certifications, CERA is for you. It’s not only a reputed risk professional course, but it also concentrates on a particular type of risk, i.e. enterprise risk. The workplace has been evolving and you need to understand risk 360 degree to do something about it. CERA will aid with you tools, techniques and skills that are unique and will help you deal with almost any risk and uncertainty organizations face these days. CERA is recognized by Societies of Actuaries (SOA).
There’s no such eligibility you require other than your willingness. If you’ve a degree in business or maths, that would help. However, if you’re economics, finance or liberal arts major, you can still go for CERA. The best part of CERA is that you can pursue this course while you work. It’s a self-study program that will help you study at your own pace and get on the job training as well.
CERA Career Prospects
If you get certified as CERA professional, you have multiple opportunities. Here are the industries you can get into –
- Financial Services
If you want to be specific, here are the roles you would be able to play if you get your CERA certification –
- Risk Manager
- Modelling & Analytics Director
- Operational Risk Manager
- Chief Financial Officer
- Risk Strategy Director
- Quantitative Solutions Analyst
- Consulting Actuary
- Chief Risk Officer
- Chief Actuary
After completing CERA certification, your compensation would be very lucrative. You would get around US $116,038 per annum according to Payscale.com.
Let’s look at the key compensation stats to understand the compensation after CERA certification in little more detail.
#4 – Certified Risk Managers (CRM)
This is another risk certification you can think of when you want to take care of the entire risk domain of the organization. This certification is offered by The National Alliance for Insurance Education & Research. The five CRM exam courses you can do are –
- Principles of Risk Management
- Analysis of Risk
- Control of Risk
- Financing of Risk
- Practice of Risk Management
As such there is no requirement for studying these courses under CRM. But they’re rigorous and you need to have some understanding about the risk in organizations. Thus, if you have two or more years of experience in the risk domain, that would definitely help you understand the curriculum and will be of better use for your career aspirations.
CRM Career Prospects
By doing this course, you will be able to expand your knowledge drastically. To be precise you will become Planners, Protectors and Guardians of risk; yes you will become Risk Manager as you complete this certification.
The compensation for Certified Risk Managers is around US $63,000 according to SimplyHired.com. But if we take into account the compensation of risk managers, it would be around US $80,000 to $111,000 according to Investopedia.com.
Risk Managers’ Salary
Till now we have discussed four certifications in risk management and how they can impact your compensation and can improve your career prospects. But in this section, we will look at an overall picture of the risk management salary, so that you can get an understanding of how much if you can expect as a compensation, with or without certification (any) and experience.
First, let’s start with the average risk managers’ salary by looking through all the jobs risk managers handle. According to Simplyhired.com, it is US $104,000 per annum. Let’s have a look at the graph and then we can discuss in detail about the same.
If you look at the bottom of the graph, you will see that the bottom 10% earn only around US $61,266; whereas the top 10% earns around US $178,740. To get an average from the middle of the graph, the median salary for risk managers is around US $104,646 per annum which is not a bad amount by any means.
You may wonder how you would be among top 10%. There are two things you need to have. First is a certification from a reputed globally recognized institute. You can choose any one certification from the four we’ve mentioned. Second, you need to have experience in the risk domain. If you have these two, you would be able to reach that top 10% easily.
Now, if you would like to become a risk management professional or you already are a risk management professional, then how would you know that your compensation would grow next year or 5 years from now.
Here we’re presenting a compensation graph of risk management professional from July, 2012 to April, 2014 so that you can understand the big picture of how the compensation of risk management profession has evolved over the years.
Let’s have a look –
(Image source: http://www.indeed.com/salary?q1=Risk+Management )
If you look at the graph, you would see that the compensation growth is very slow. But the good news is that there’s a growth in the curve and around April, 2014 the growth is very steep. So if you would like to be a risk management professional or you already are one, know that growth is ensured. You can accelerate your growth by knowing more, having more experience and by getting certified under a globally recognized body.
Risk Management Analysts’ salary
you’re working in risk, there are chances that you may work as a risk management analyst as well. If you look at the average salary of risk management analyst, you will get a big picture of overall risk management compensation.
According to Indeed.com, a risk management analyst earns around US $91,000 per annum on an average.
In the below graph, you would be able to see a progression of the salary of risk management analyst profile. From that you would get an idea about how the risk management domain is evolving over the years.
If you notice clearly, you’ll see that there’s a positive growth in the curve. The compensation of the risk management analyst profile didn’t grow suddenly, but it improved gradually and with incremental growth rate.
Let’s have a look –
If you are risk management analyst professional or desire to be, have a closer look and this graph will motivate you to work hard and become the best in this domain.
Other risk management jobs and compensations
In this last section, we will be having a closer look related risk management jobs and how much compensation you can get if you need to play the role.
According to Indeed.com, here’s a list of compensation for other related risk management designation. Let’s have a look at it first –
The above list is an average list and it can’t be treated as an exhaustive list. Still we will look at some of the aspects to deepen our understanding.
If you want to be an online trader, the average compensation is lowest. But there’s no point in becoming an online trader, if your chief interest is risk management. If you look at two particular designations – risk analyst and risk management analyst, the average compensation is US $71,000 and US $57,000 per annum respectively. Few other designations are completely unrelated so we will skip those. Other than that, if we look at Technology Risk Senior Analyst and Credit Risk Analyst, the salaries of both of these designations are quite good. So you can easily say that as far as present scenario is concerned, it’s better to specialize than to go for a risk manager profile. Even Junior Risk P&L Analyst profile pays well.
Look for something specific in risk management certifications. It will help you earn more expertise and as a result better compensation in the long run.