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.

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 certifications 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:

#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.

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.

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.

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.

As soon as they clear the FRM certification examination, 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.

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 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. 

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

  • A bachelor’s degree with two years of relevant work experience, orFour years of relevant work experience if they do not have a bachelor’s degree, orNo 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.

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. 

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 $1,080Contributing members pay an application fee worth $150 and a program fee worth $1,180Non-members pay an application fee worth $150 and a program fee worth $1,305

The fee paid is non-refundable.

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.

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.

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.

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.

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

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.

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.

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

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

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

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

Other Risk Management Certifications

Besides the ones mentioned above, there are other certifications 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.

This has been a guide to what is Risk Management Certification. We explain the top 4 certifications – FRM, PRM, CERA, and CRM along with related details. You may learn more from the following articles –

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.

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.

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.

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