Risk Management Certification

Article byWallstreetmojo Team
Edited byPallabi Banerjee
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Risk Management Certification?

Risk management certification is a credential to prove that the people acquiring it have expertise in identifying and managing risks associated with assignments, projects, and investments. The ones with this certification are able to detect the potential risks of a deal and thereby help participants take care of the same.

What Is Risk Management Certification

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Risk management, as the name implies, helps individuals learn how to manage risks. However, risk can be managed if identified. The risk management certification courses have been designed to teach aspirants to detect and assess the risks involved before developing the skills to manage and mitigate the same.

Key Takeaways

  • Risk management certification is a credential that ensures that certified professionals possess an advanced understanding and knowledge of identifying risks and mitigating them.
  • Obtaining these certifications makes individuals better decision-makers as they can identify the risks associated with the projects, investments, or any deal.
  • The significant certifications include the ones acquired by Financial Risk Managers, Professional Risk Managers, Chartered Enterprise Risk Analysts, and Certified Risk Managers.
  • The eligibility criteria, cost, and other associated details vary based on the programs candidates choose to proceed with.

Risk Management Certifications Explained

The risk management certification refers to the qualification that an individual earns in order to qualify as a professional risk manager in the corporate world. Management of risk is an important activity within a business, and enterprise risk management certification ensures the operational procedure runs smoothly with minimum loss and proper control over all negative impacts, be it internal or external.

Risks come in the form of challenges and problems that hinder the progress of the organization and result in unnecessary expenses, delay in project completion and also loss of important and valuable opportunity which could have helped the organization move several steps ahead within a short time.

In the field of financial risk management, in order to have a successful career, it is necessary to have a certification. that will offer comprehensive knowledge and skill to the candidate. Such certifications ideally ensure that the candidate also gets good exposure to real-life projects and practical applications in the form of job experiences within the course study period. These courses teach analysis, detailed assessment techniques, and risk control or mitigation strategies.

Candidates who clear the financial risk management exams and obtain such certifications are expected to have top level skill, knowledge and expertise, which will not only increase their credibility but also open a lot of doors towards lucrative opportunities in the risk management field.

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Top 4 Risk Management Certifications

Risk management certification promises to make individuals experts in assessing and mitigating risks, including legal risks and credit risks. In addition, these programs help develop the professional skills of those who already have risk management aptitude. However, different enterprise risk management certification fall under the risk management label.

One must fulfill the required eligibility criteria to enroll in the risk management certification programs and be ready to explore the career prospects and compensation packages the field offers after completing the course. Then, based on their interest, aspirants can choose to pursue suitable certifications.

Below are the significant certifications that one can opt for to be the best risk management, professional:

Risk Management Certification Types

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#1. Financial Risk Managers (FRM)

FRM designation is recognized, and the certification is issued by the Global Association of Risk Professionals (GARP). It holds significance in every big bank and firm across the globe. The professionals who exhibit the knowledge, gather the skills, and develop abilities to identify, assess, and mitigate the risk issues after completing the certification are ideal candidates.

This risk management certification online/ offline is equivalent to the Master’s degree of around ten national and regional education systems and is recognized in over 90 nations across the globe.

Requirements

For the candidates to be FRM certified, they must:

  • Pass two multiple choice exams and appear for Part I first and then for Part II.
  • Demonstrate two years of relevant professional experience

The certified individuals are encouraged to go for 40 hours of Continuing Professional Development (CPD) once every two years. This ensures they remain updated and aware of the latest developments in the field of risk management. This makes them better professionals with access to the latest and best practices.

Exam

The examination is classified into two parts:

  • Part I consists of 100 multiple-choice questions based on the tools used to assess financial risks, which include risk management foundations, quantitative analysis, valuation of the market, and risk models. It is computer-based testing (CBT) conducted in May, August, and November every year.
  • Part II, which candidates appear for after clearing Part I, consists of 80 multiple-choice questions based on the application of the tools. The questions are designed to assess understanding and knowledge of market risk, credit risk, liquidity risk management, operational risk, current issues in the market, etc. It is computer-based testing (CBT) every year in May and November.

Candidates must take these exams sequentially for the marks to be valid.

Cost

The new candidates must pay $1000-$1200 to appear for the Part I examination, while the returning must register their seats with $600-$800. For the Part II registration, the candidates must pay $600-$800.

Career Prospects

As soon as they clear the FRM certification examination in the field of operational risk management certification, they can choose varied career options. These include risk managers (personal banking), credit risk specialists, operational risk analysts, risk management analysts, enterprise risk managers, commercial risk managers, etc.

Salary

As an FRM, professionals are subject to receiving a lucrative compensation package. The salary ranges between $50K and $155K.

#2. Professional Risk Managers (PRM)

The designation of in the field of operational risk management certification is recognized, and the certification is issued by the Professional Risk Managers’ International Association (PRMIA). This certification includes a series of exams to ensure the pass-outs acquire the maximum possible knowledge and skills that a PRM should have. The ones who understand the best practices in the industry and meet specific performance standards qualify for the positions. 

Requirements

To be eligible for this certification, one needs to either have the following:

  • A bachelor’s degree with two years of relevant work experience, or
  • Four years of relevant work experience if they do not have a bachelor’s degree, or
  • No work experience if they possess MBA/MSF/MQF/CFA degree.
  • Candidates must complete the program within three years of enrolment or two years from the date of the first examination cleared.
Exam

The authorities hold the PRM examinations throughout the year at regular intervals. While the 2022 scheduling windows are already shut, the new registrations for 2023 are yet to begin. 

Cost

There are three membership types, and the applicable fee is the same. The options are:

  • Sustainable/Corporate/RIM members pay an application fee worth $150 and a program fee worth $1,080
  • Contributing members pay an application fee worth $150 and a program fee worth $1,180
  • Non-members pay an application fee worth $150 and a program fee worth $1,305

The fee paid is non-refundable.

Career Prospects

As soon as the candidates complete this certification successfully, they are open to multiple job openings. For example, they can start as a risk manager, associate-market risk research analyst, or transaction risk manager and reach levels as high as a Director.

Salary

The salary range of PRMs is pretty good. For example, professionals with experience of 1 to 4 years get around US $82,424 per annum. However, if the experience is beyond that, they are eligible for around US $110,000 per annum and even more.

#3 – Chartered Enterprise Risk Analyst (CERA)

The certification is recognized and issued by the Societies of Actuaries (SOA) as granted by the CERA Global Association (CGA). This global enterprise risk management certification is a self-study program that helps candidates study at their own pace and get on-the-job training. The curriculum covers the niche’s theoretical and practical professional aspects of the niche. Completing this certification ensures that professionals are better decision-makers, considering the risks associated with the projects. The certification is a level between Associate and Fellowship.

Requirements

To be eligible to become CERA certified, one must:

  • Meet the standard requirements of the International Actuarial Association (IAA) syllabus.
  • Fulfill additional Enterprise Risk Management (ERM) educational requirements per the CERA syllabus.
Exam

The examination is based on the concepts and framework of ERM in addition to the process, risk categories, measures, modeling, best practices, aggregation, and techniques, along with capital assessment and allocation.

Cost

The costs involve seating charges, seminar attending fees, and other material prices. Hence, it may vary from course to course and person to person.

Career Prospects

As CERA certified, one can become a risk manager, modeling and analytics director, operational risk manager, chief financial officer, risk strategy director, quantitative solutions analyst, consulting actuary, chief risk officer, chief actuary, etc.

Salary 

After completing the CERA certification, the compensation is quite very lucrative, with the package being US $116,038 per annum or even more.

#4 – Certified Risk Managers (CRM)

The certification makes you a member of the Organization of Certified Risk Managers (CRM). Obtaining the certification ensures the aspirants have an advanced understanding and knowledge of risk management along with practical experience in the field.

Requirements

There are no specific eligibility criteria here, but firms prefer candidates with practical experience.

Exam

The exam comprises five aspects – Principles of Risk Management, Risk Analysis, Risk Control, Risk Financing, and Risk Management Practices.

Cost

The costs involve seating charges, seminar attending fees, and other material prices. Hence, it may vary from course to course and person to person.

Career Prospects

This certification helps professionals become anything from risk planners to risk protectors to risk guardians.

Salary

The compensation for Certified Risk Managers starts at around US $63,000.

Other Risk Management Certifications

Besides the ones mentioned above, there are other best risk management certification that aspirants may opt for to build a career in risk management. These include Associate in Risk Management (ARM), Certified Professional in Healthcare Risk Management (CPHRM), Certification in Risk and Information Systems Control (CRISC), etc.

All of the above are best risk management certification that deep dive into various practical and useful techniques that typically industry experts implement in order to manage market risk. They not only teach how to mitigate or control them, but also how to identify them, analyse and evaluate the extent of damage they can do, or the various challenges they can bring for the company. All financial risk, which may be in the form of currency or commodity or interest rate risk, pose a threat but can be tackled with proper expertise and decision making.

Frequently Asked Questions (FAQs)

Why choose risk management certification?

Risk management certification builds and develops the understanding of risks in professionals. On completion, these individuals know how to identify risks, assess their levels, and work on mitigating the effects to the utmost possible extent.

Is risk management certification worth it?

Yes, opting for this certification is worth it as it makes professionals better decision-makers. Once they complete the programs, they can assess the risks and make decisions per their abilities to mitigate the same. Though opting for the courses and appearing for exams is costly, the compensation received after completing the courses makes the expenses worth it.

Which risk management certification is the best?

The risk management programs that are offered by different sources are all good. However, it depends on the aptitude, opportunities offered, and expected compensation that makes professionals choose the programs they finally choose.

This has been a guide to what is Risk Management Certification. We explain the top 4 certifications along with other certifications. You may learn more from the following articles –

Reader Interactions

Comments

  1. Andy Lucard says

    Very Informative as well as helpful. Actually I also wanted to ask you one single question. My question is How to become a Professional Risk Manger? Do have any kind of study material where you have explained about PRM. How to clear this exam?

    • Dheeraj Vaidya says

      Thanks. Well today many top companies are looking for the professionals who are designated with such credentials and can analyze and manage those risks effectively. So to explain all about PRM I have written a complete beginners guide to PRM Exam . Hope this helps you.

  2. Abraham Suleiman says

    Great Resource!! You are one of the best blogger that I have seen till now. You share the best and relevant knowledge which is very useful for students as well as professionals. Keep it up. Mostly I prefer reading books. And since many days I was searching for some interesting books on Risk Management. Can you prefer me some books that are very essential to read. Thanks in advance