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For example, banks have to comply with a number of different financial stability ratios imposed by regulators like capital adequacy or sectoral exposures caps and so on.

Regulatory Risk – This is not just about following all the written guidelines, but there is a fair bit of quantitative juggling too.

For example, eCommerce is a market risk for brick and mortar stores because it is drastically reshaping the retail market itself.

Market Risk – This is the risk emanating from the market that a company operates in.

For example, airlines are totally dependent on the price of oil and automobile manufacturers are probably concerned about iron ore prices as well.

Commodity Risk – Companies trading in commodities or using these commodities for their core business operations would do well to keep an eye on commodity risks.

Either way, you need someone to quantify and manage the risk. Their risk profile, therefore, can have traits which make them very valuable for hedging or speculating.

Derivatives Risk – Derivatives are assets that derive their value from other assets.

Such assets are sensitive to credit events which can affect the risk of the issuer as well as interest rate movements.

Fixed Income Risk – The risks inherent in fixed income products like government and corporate bonds.

It can all become a bit complex and you need someone to create a better picture of the portfolio level risk. These assets react in different ways to different events and can increase or decrease the risk depending on their correlations.

Portfolio Risk – A portfolio of unique assets can really add to the complexity of the overall risk profile of investments.

FRMs are well suited to manage such models. Just having these models (which are approximations of reality), can introduce uncertainties which is called model risk.

Model Risk – Banks and other corporations prepare various models to better represent their current situation (in terms of inventory or credit risk etc) and to simulate future scenarios.An operational risk analyst would aggregate, analyse and monitor these risks and coordinate with various divisions to manage them. Operational Risk – These are risks arising from a company’s day-to-day operations.Who better to make things simple than an FRM? When you have billions of creditors and debtors with various credit risks, multiple loan maturities etc, this can get rather complicated. Liquidity Risk – Liquidity is the ability to manage short term cash requirements for operational stuff.Being a credit analyst is an ideal role for an FRM. There are loans and bonds worth several trillion dollars out there and someone is crunching the numbers and calculating the risk of the issuers. Credit Risk – The risk that a debtor does not pay you back.Here are just a few of the many roles in financial risk that FRMs can and are being hired for: That might seem like a narrow niche, but it is anything but that.

If you are looking for FRM exam preparation resources, check out this article:īest FRM Prep Courses & Study Material (2022) ranked by Bankers Financial Risk Analyst/ ManagerĪn FRM certification can open up quite a few career options for you, but the most obvious choice would be some sort of financial risk management role. This list is certainly not exhaustive, but I have tried to cover the main ones. We shall start with the big one first – financial risk analyst/ manager type roles and then work our way down. However, having a solid background in risk management can open doors for many other careers and here we touch upon just a few of them. That is what an FRM is really about.įinancial risk management roles are what an FRM would be most suitable for.

But at the end of the day, all of that math is just a tool to achieve the ultimate goal of quantifying and managing risks. Therefore, if you are someone who likes to make sense of large chunks of data and enjoy running multivariate regression analysis when you are bored, you will just love the FRM curriculum. The FRM curriculum is definitely more quantitative and math-heavy than other certifications like the CFA. Even though banks and investment funds are the ones most keen on managing financial risks, almost every sizeable company in every industry would very much like to do so as well. Due to the very nature of the FRM core curriculum, it is a certification that is best suited for financial risk management type roles, among others.

New York Institute of Finance (NYIF) ReviewĪs per the Global Association of Risk Professionals (the entity that awards the FRM certification), 9 of the top 10 FRM recruiters in the world are banks.

Commercial Banking & Credit Analyst (CBCA™).

Chartered Investment Banking Analyst (CIBA™).

Financial Modeling & Valuation Analyst (FMVA®).

Relationship Management/ Client Coverage.