FRM Exam-Level Preparations

Last Updated On -10 Jan 2025

FRM exam-level preparation, how should I do it? What are FRM course subjects? Anyone who has ever wanted to pursue FRM has had these questions and if you're one of them and the same question brought you here, you have just arrived at the right place. But, before actually dissecting the whole process of preparation in detail, let us first take a look at what FRM is.

What is FRM?

Just like CFA, FRM is Financial Risk Management, and achieving this certification is considered the most reputed or highest level certification in the subject of risk management. So in this respect, CFA and FRM are the same. The Global Association of Risk Professionals (GARP) offers the certification of Financial Risk Management. A Financial Risk Manager is a qualified professional who helps a company develop and implement risk management strategies. They also predict, analyze, and manage all financial risks within the company. Risk management can be a major factor in the success or failure of any business, and therefore FRMs become highly sought-after professionals in corporate services.

What is the FRM Exam Pattern?

Before preparing for the exams, you should know how the paper is framed, and what is the syllabus of FRM. While practicing and preparing, consider mock tests that provide question papers of the exact pattern. This will help you identify your weak areas and give you a complete idea of how much time you should spend on every question. Here is a brief explanation of your paper pattern:

FRM Level 1:

The FRM level Part 1 exam consists of a total of 100 Multiple Choice Questions (MCQs) questions to be answered in a span of 4 hours. Thus, effectively, a candidate has 2.4 minutes to answer a question.

These questions are mixed in terms of difficulty. There might be questions that may simply require the application of a formula. However, there may also be questions that require the application of a concept learned in a real-life case.

FRM Level 2 :

Part 2 of the FRM levels exam, level 2 is a 4-hour-long exam consisting of 80 multiple-choice questions. Thus, candidates have 3 minutes per question. Again, the level of difficulty is diverse. There may be some questions that take longer than 3 minutes and some that are solved within 30 seconds

Understanding FRM Level - 1 & 2

What is FRM Exam Level-1?

The inaugural stage of the FRM examination lays the groundwork for your journey toward earning the coveted title of a certified Financial Risk Manager.

It encompasses four FRM course subjects :

Foundations of Risk Management

Quantitative Analysis

Financial Markets and Products

Valuation and Risk Models.

Level I underscores the comprehension of fundamental tenets and doctrines essential for proficient risk management. Candidates must exhibit prowess in quantitative methodologies, grasp the dynamics of financial markets, and adeptly apply risk models.

What is FRM Exam Level-2?

Level II of the FRM exam is engineered to evaluate candidates' ability to wield advanced risk management concepts in real-world scenarios.

The examination encompasses the following subjects :

Market Risk Measurement and Management

Credit Risk Measurement and Management

Operational and Integrated Risk Management

Risk Management and Investment Management

Current Issues in Financial Markets.

Level II requires candidates to analyze complex risk scenarios, evaluate risk mitigation techniques, and have a deep comprehension of current financial market patterns.

How to Pass the FRM Exams Levels?

Knowing marking schemes can be a plus point for your preparation, as it makes you understand whether to attempt or leave a question about which you are unsure. The marking scheme for both the levels is as follows:

There is no negative marking for incorrect or unanswered questions when it comes to grading for FRM Part 1 and Part 2.
Each question carries equal weightage, meaning 1 mark for each correct question.

What is the FRM Paper Pattern ?

Knowing the pattern of the paper is a significant step in your preparation journey. This section delves into all the details of FRM Level 1 and Level 2:

FRM Level 1 Paper Pattern:

Aspect	Details
Paper Pattern	Multiple Choice Questions (MCQs)
Total Questions	100
Duration	4 hours
Marking Scheme	Each question carries 1 mark
Negative Marking	No
Passing Score	Based on the overall performance of all exam candidates, and not based on a predetermined percentage or fixed score.
Exam Date	The Exam is offered each year in May, August, and November

FRM Level 2 Paper Pattern:

Aspect	Details
Paper Pattern	Multiple Choice Questions (MCQs
Total Questions	80
Duration	4 hours
Marking Scheme	Each question carries 1 mark
Negative Marking	No
Passing Score	Based on the overall performance of all exam candidates, and not based on a predetermined percentage or fixed score
Exam Date	The Exam is offered each year in May, August, and November.

How to Prepare for the FRM Level 1 & 2 Exams?

The preparation of FRM Level 1 & 2 exams can be hectic if you don't plan it already.

Down below are some points that are essential when it comes to preparation for FRM levels :

Initiate Early and Devise a Set of Study Rules:

Robert Brault quotes, “One key to success is to have lunch at the time of day most people have breakfast”.

Therefore, commence your FRM preparation well in advance to afford ample time for assimilating the extensive material present at each level. Make a personalized study schedule and sketch out time slots for studying each domain, revisiting critical concepts, and tackling practice questions.

Leverage Official Study Materials:

GARP provides official study materials comprising textbooks, practice exams, and online resources, which constitute the classical components of your preparation package. While studying top-notch content, don't forget to focus on the basics of each topic. Classify your available content according to the official curriculum, and know what you need to study and what to leave.

Practice, Practice, Practice:

As the exam is MCQ-based it is necessary that you're prepared to answer and mark each question accurately in less time. For this all you need is practice. As you practice, you will gain accuracy with time and will decrease the period you take for each question. Refer to the practice papers offered by official sources. At Least 3 weeks before the exam date, you must practice the whole syllabus multiple times. Try to practice more as the exam day approaches.

Target Weak Areas:

Identify your Achilles' heel through diagnostic assessments and allocate additional resources to shore up your understanding of those domains. Abstain from neglecting any facet of the curriculum, as each domain is pivotal for attaining success in the examination.

Frequently Asked Questions (FAQs):

What does FRM stand for?

FRM stands for Financial Risk Manager, which is a highly respected certification in the field of risk management. FRMs help companies develop and implement risk management strategies to mitigate financial risks.

How do I prepare for FRM levels?

Preparing for FRM levels involves understanding the exam structure, leveraging official study materials provided by GARP, practicing extensively, and targeting weak areas through diagnostic assessments.

What are the FRM levels and their content?

FRM has two levels:

-Level I covers foundational concepts such as risk management principles, quantitative analysis, financial markets, and valuation.

-Level II delves into advanced topics including market risk, credit risk, operational risk, investment management, and current financial market issues.

What is the exam pattern for FRM levels?

FRM Level I consists of 100 MCQs to be completed in 4 hours, with no negative marking.

FRM Level II consists of 80 MCQs to be completed in 4 hours, also with no negative marking.

What is the passing score for FRM exams?

The passing score for FRM exams is determined based on the overall performance of all exam candidates and is not based on a predetermined percentage or fixed score.