Risk Designations and Continuing Education

Almost everyone in the industry is aware that the CFA program offers the opportunity to learn and improve one’s knowledgebase in a broad area of investment topics including quantitative analysis, economics, financial reporting, corporate finance, equity, fixed income, derivatives, alternative investments, ethics, and portfolio management. In fact, there are currently over 82,000 CFA charter holders across the globe who have passed all three levels of the exam.

In recent months, however, I have received many questions from our clients interested in an exam or credential that focuses specifically on risk management, so I’ll weigh in on the topic here.

There are two different organizations which I know of that administer exams focused on risk management. GARP (Global Association of Risk Professionals) offers the Financial Risk Manager exam (FRM) while PRIMIA (Professional Risk Managers’ International Association) offers the Professional Risk Manager exam (PRM). Both are large reputable organizations that bring the community of risk professionals together to promote sound risk management practices globally.

The two exams cover the similar overall topics of market risk, credit risk, operational risk, and investment management risk. The PRM, however, goes much further in depth into the mathematical foundations of risk management including such areas as calculus, matrix algebra, probability theory, and numerical methods.

The FRM, which originally consisted of a single five hour exam given once a year is moving to a two-exam format offered twice a year. The PRM, made up of four 1-2 hour exams, is offered every day at computer testing centers around the world. You can take all four exams in one day or one at a time. One or two levels of the exam are waived if a candidate has achieved certain other designations such as the CFA or Actuarial Fellow.

If interested in tackling another exam, I would suggest looking into the FRM and PRM. Their websites offer candidate guidebooks which provide details to help you determine which one is right for you. There are also blogs out there which discuss the pluses and minuses of each.