{"id":3440,"date":"2024-12-13T15:46:18","date_gmt":"2024-12-13T21:46:18","guid":{"rendered":"https:\/\/www.kansascity.com\/careers-education\/?p=3440"},"modified":"2026-06-17T01:00:24","modified_gmt":"2026-06-17T07:00:24","slug":"financial-risk-management","status":"publish","type":"post","link":"https:\/\/www.kansascity.com\/careers-education\/financial-risk-management\/","title":{"rendered":"What is Financial Risk Management and What Does an FRM\u00ae Do?"},"content":{"rendered":" <p class=\"wp-block-paragraph\">Financial risk managers are like the safety net of the finance world, making sure companies stay steady when the unexpected happens. And the future looks bright\u2014financial managers have an impressive job outlook, with a <a href=\"https:\/\/www.bls.gov\/ooh\/management\/financial-managers.htm\" target=\"_blank\" rel=\"noreferrer noopener\">17%<\/a> increase in jobs projected through 2033, far outpacing the average growth rate of just 4% across all careers.<\/p> <p class=\"wp-block-paragraph\">&#8220;Okay, that sounds cool, but what even <em>is<\/em> financial risk management?&#8221;<\/p> <p class=\"wp-block-paragraph\">I\u2019m glad you asked! Financial risk management is the art and science of keeping companies out of trouble when it comes to money. But I know you\u2019re here for more than just a quick definition. So, welcome to Financial Risk Management 101\u2014let\u2019s dive in and see what a career in this field could mean for you.<\/p> <p class=\"custom_key wp-block-paragraph\"><strong>Key Takeaways<\/strong><\/p> <ul class=\"wp-block-list custom_underline\"> <li><strong>Financial Risk Management Defined<\/strong>: It\u2019s about identifying, assessing, and addressing financial risks to keep companies stable and profitable.<\/li> <li><strong>FRMs Are Problem-Solvers<\/strong>: Financial risk managers use data, tools, and strategies to tackle risks like market volatility, credit issues, and compliance challenges.<\/li> <li><strong>High Demand, High Reward<\/strong>: The need for skilled FRMs is growing, offering diverse job opportunities and competitive salaries.<\/li> <li><strong>FRM\u00ae Certification is Key<\/strong>: The FRM<strong>\u00ae <\/strong> program, recognized globally, is a must-have for professionals aiming to stand out in this field.<\/li> <li><strong>Versatile Career Path<\/strong>: FRMs can work in banks, insurance companies, asset management firms, and more, making it a flexible and exciting career choice.<\/li> <\/ul> <h2 class=\"wp-block-heading\" id=\"h-what-s-financial-risk-management-all-about\"><strong>What\u2019s Financial Risk Management All About?<\/strong><\/h2> <p class=\"wp-block-paragraph\">In simple terms, financial risk management is about spotting potential money problems before they happen and coming up with a plan to handle them. It\u2019s like being the steady hand on the wheel of a company\u2019s finances\u2014keeping things steady no matter how wild the markets get.<\/p> <p class=\"wp-block-paragraph\">Here\u2019s the deal: companies face risks every day. Markets can crash, borrowers might not pay back loans, or unexpected events (hello, 2020!) can throw everything off track. Financial risk managers put on their detective caps, figure out where those risks are hiding, and strategize how to remove or alleviate them.<\/p> <p class=\"wp-block-paragraph\">As a result, FRMs are integral to corporations, particularly those with hefty wallets who are willing to invest money to protect their assets.<\/p> <h2 class=\"wp-block-heading\" id=\"h-what-do-financial-risk-managers-frms-actually-do\"><strong>What Do Financial Risk Managers (FRMs) Actually Do?<\/strong><\/h2> <p class=\"wp-block-paragraph\">If you\u2019re wondering what a day in the life of an FRM<strong>\u00ae <\/strong> looks like, there are a few key tasks they participate in, such as spotting and measuring risks, developing solutions, and communicating those solutions to their employer or client. Here\u2019s a quick breakdown:<\/p> <ul class=\"wp-block-list\"> <li><strong>Spot Risks<\/strong>: FRMs dig into financial data and trends to find potential trouble. It might be a market that\u2019s too volatile or a client who\u2019s struggling to pay their debts. This process involves having a comprehensive understanding of the business in question, collecting and analyzing data, analyzing hypothetical scenarios, and monitoring key risk indicators to have their finger on the pulse.<\/li> <li><strong>Measure Risks<\/strong>: Tools like risk models and spreadsheets help them figure out just how big or small a risk really is. Risk models are a little difficult to explain, but they&#8217;re often a combination of formulas, statistical techniques, and simulations. Often, they&#8217;re accessed via special software or run through programming languages like Python.<\/li> <li><strong>Come Up with Solutions<\/strong>: Once they\u2019ve found a risk, they suggest ways to fix or minimize it. For example, they might recommend diversifying a portfolio or using hedging strategies. This can be done through emails, 1-on-1 chats, formal reports, or even large presentations, depending on the importance of the issue and the audience who needs briefing.<\/li> <li><strong>Keep Everyone in the Loop<\/strong>: FRMs explain risks and solutions to decision-makers, often acting as the voice of reason when things get tricky. As a result, communication skills are a huge bonus for aspiring financial risk managers.<\/li> <\/ul> <h2 class=\"wp-block-heading\" id=\"h-why-is-financial-risk-management-a-big-deal\"><strong>Why Is Financial Risk Management a Big Deal?<\/strong><\/h2> <p class=\"wp-block-paragraph\">Here\u2019s why this field is so important\u2014and why you might want to join it.<\/p> <h3 class=\"wp-block-heading\" id=\"h-companies-need-risk-experts\"><strong>Companies Need Risk Experts<\/strong><\/h3> <p class=\"wp-block-paragraph\">Every business, big or small, faces risks. Whether it\u2019s a global bank managing billion-dollar investments or a small asset management firm handling portfolios, everyone needs someone who knows how to handle risks. That\u2019s where FRMs shine.<\/p> <h3 class=\"wp-block-heading\" id=\"h-it-s-a-job-that-pays-well\"><strong>It\u2019s a Job That Pays Well<\/strong><\/h3> <p class=\"wp-block-paragraph\">Let\u2019s be honest\u2014money matters when you&#8217;re choosing a career, and FRMs make good money. Their specialized skills mean they\u2019re in high demand, and with certifications like the FRM<strong>\u00ae <\/strong>designation, they can command even higher annual salaries\u2014<a href=\"https:\/\/www.bls.gov\/oes\/current\/oes132054.htm\" target=\"_blank\" rel=\"noreferrer noopener\">$118,950<\/a> on average. <\/p> <h3 class=\"wp-block-heading\" id=\"h-it-s-never-boring\"><strong>It\u2019s Never Boring<\/strong><\/h3> <p class=\"wp-block-paragraph\">No two days are alike for FRMs. One day, you could be analyzing how interest rate changes affect loans. The next, you\u2019re advising on how to deal with a new government regulation. Plus, problem-solving is the core of this career, so if you love using your brain to strategize and develop solutions, this may be your perfect path.<\/p> <figure class=\"wp-block-image aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"1024\" src=\"https:\/\/www.kansascity.com\/careers-education\/wp-content\/uploads\/sites\/7\/2024\/12\/financial-risk-managersFRMs-1024x1024.png\" alt=\"FRM careers\" class=\"wp-image-3441\" srcset=\"https:\/\/www.kansascity.com\/careers-education\/wp-content\/uploads\/sites\/7\/2024\/12\/financial-risk-managersFRMs-1024x1024.png 1024w, https:\/\/www.kansascity.com\/careers-education\/wp-content\/uploads\/sites\/7\/2024\/12\/financial-risk-managersFRMs-300x300.png 300w, https:\/\/www.kansascity.com\/careers-education\/wp-content\/uploads\/sites\/7\/2024\/12\/financial-risk-managersFRMs-150x150.png 150w, https:\/\/www.kansascity.com\/careers-education\/wp-content\/uploads\/sites\/7\/2024\/12\/financial-risk-managersFRMs-768x768.png 768w, https:\/\/www.kansascity.com\/careers-education\/wp-content\/uploads\/sites\/7\/2024\/12\/financial-risk-managersFRMs-280x280.png 280w, https:\/\/www.kansascity.com\/careers-education\/wp-content\/uploads\/sites\/7\/2024\/12\/financial-risk-managersFRMs.png 1080w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure> <h2 class=\"wp-block-heading\" id=\"h-where-can-frms-work\"><strong>Where Can FRMs Work?<\/strong><\/h2> <p class=\"wp-block-paragraph\">One of the best parts about becoming an FRM<strong>\u00ae <\/strong> is the flexibility. You\u2019re not locked into one type of job or company. Here are a few places you could end up:<\/p> <ul class=\"wp-block-list\"> <li><strong>Major Banks<\/strong>: Managing risks for loans, trading, and investments.<\/li> <li><strong>Insurance Companies<\/strong>: Helping them navigate financial challenges and meet regulatory standards.<\/li> <li><strong>Asset Management Firms<\/strong>: Keeping client portfolios safe from market swings.<\/li> <li><strong>Accounting Firms<\/strong>: Advising on risk measurement and management.<\/li> <li><strong>Regulatory Agencies<\/strong>: Ensuring companies comply with financial rules.<\/li> <\/ul> <h2 class=\"wp-block-heading\" id=\"h-what-s-the-job-outlook-like\"><strong>What\u2019s the Job Outlook Like?<\/strong><\/h2> <p class=\"wp-block-paragraph\">The demand for financial risk professionals is booming. Growth for financial managers is expected to grow a whopping 17% between 2023 and 2033. The average growth? A measly 4%.<\/p> <p class=\"wp-block-paragraph\">With new regulations, market uncertainty, and global risks like cyber threats, companies are on the hunt for people who can keep their finances safe. If you\u2019ve got the skills and certification, there\u2019s no shortage of opportunities.<\/p> <h2 class=\"wp-block-heading\" id=\"h-why-financial-risk-management-might-be-right-for-you\"><strong>Why Financial Risk Management Might Be Right for You<\/strong><\/h2> <p class=\"wp-block-paragraph\">Still on the fence? Here are a few reasons why this field could be a perfect fit:<\/p> <ul class=\"wp-block-list\"> <li>You love problem-solving and figuring out puzzles.<\/li> <li>You\u2019re good with numbers and data but also enjoy making strategic decisions.<\/li> <li>You&#8217;re tech-savvy, adaptable, and a quick learner.<\/li> <li>You&#8217;re an excellent communicator, and people look to you for your clear, thoughtful advice.<\/li> <li>You want a career that\u2019s challenging, rewarding, and always evolving.<\/li> <\/ul> <h2 class=\"wp-block-heading\" id=\"h-final-thoughts-is-becoming-an-frm-nbsp-worth-the-risk\"><strong>Final Thoughts: Is Becoming an FRM\u00ae Worth the Risk?<\/strong><\/h2> <p class=\"wp-block-paragraph\">Financial risk management isn\u2019t just about numbers and math\u2014it\u2019s about analyzing data, making strategic decisions, suggesting creative solutions, and communicating with the heavy hitters in a company. Whether you\u2019re keeping a bank out of trouble or helping an investment firm grow safely, your work as an FRM<strong>\u00ae <\/strong>will <em>always <\/em>matter&#8230; and fortunately, your paycheck will reflect that.<\/p> <p class=\"wp-block-paragraph\">If this sounds like your kind of challenge, take the first step: look into the FRM<strong>\u00ae <\/strong>program, start building your skills, and get ready to step into a career that\u2019s as dynamic as it is rewarding.<\/p> <p class=\"wp-block-paragraph\">So, what do you think? Is financial risk management the path for you?<\/p> <h2 class=\"wp-block-heading\" id=\"h-faqs\"><strong>FAQs<\/strong><\/h2> <div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1733909151134\"><strong class=\"schema-faq-question\"><strong>What is risk management, in simple words?<\/strong><\/strong> <p class=\"schema-faq-answer\">Risk management is figuring out potential problems before they happen and making plans to handle them. In finance, it\u2019s about protecting a company\u2019s money from things like market changes or bad investments.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1733909159563\"><strong class=\"schema-faq-question\"><strong>What does an FRM\u00ae do?<\/strong><\/strong> <p class=\"schema-faq-answer\">An FRM<strong>\u00ae<\/strong> analyzes financial risks, measures their potential impact, and develops strategies to reduce or handle them. They work in areas like market risk, credit risk, and compliance, helping companies stay financially secure.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1733909166270\"><strong class=\"schema-faq-question\"><strong>Is FRM\u00ae better than CFA?<\/strong><\/strong> <p class=\"schema-faq-answer\">It depends on your goals. The FRM<strong>\u00ae<\/strong> focuses specifically on risk management, making it ideal for roles in that area, while the CFA covers broader topics like portfolio management and equity research. Both are highly respected certifications.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1733909181326\"><strong class=\"schema-faq-question\"><strong>What is the salary of FRM\u00ae?<\/strong><\/strong> <p class=\"schema-faq-answer\"><a href=\"https:\/\/www.kansascity.com\/careers-education\/how-much-does-frm-make\/\">Salaries for FRMs<\/a> are competitive, with a mean annual wage of $118,950 or $57.19 per hour.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1733909190722\"><strong class=\"schema-faq-question\"><strong>Do you need a degree for FRM\u00ae?<\/strong><\/strong> <p class=\"schema-faq-answer\">No, a bachelor\u2019s degree isn&#8217;t <a href=\"https:\/\/www.kansascity.com\/careers-education\/frm-certification-requirements\/\">required to pursue the FRM<strong>\u00ae<\/strong> certification<\/a>. However, it is highly recommended for most roles in financial risk management. Degrees in finance, economics, or accounting are common starting points.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1734125642337\"><strong class=\"schema-faq-question\">What is the cost of an FRM<strong>\u00ae<\/strong> certification?<\/strong> <p class=\"schema-faq-answer\"><a href=\"https:\/\/www.kansascity.com\/careers-education\/frm-certification-cost\/\">FRM<strong>\u00ae<\/strong> certification costs<\/a> include exam and enrollment fees, which total around $2000, but you&#8217;ll save about $400 with early registration.<\/p> <\/div> <\/div> ","protected":false},"excerpt":{"rendered":"<p>Financial risk managers are like the safety net of the finance world, making sure companies stay steady when the unexpected happens. And the future looks bright\u2014financial managers have an impressive job outlook, with a 17% increase in jobs projected through 2033, far outpacing the average growth rate of just 4% across all careers. &#8220;Okay, that [&hellip;]<\/p> ","protected":false},"author":11,"featured_media":3477,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3,244],"tags":[],"class_list":["post-3440","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-careers-education","category-finance"],"acf":{"external_author":[129],"external_editor":"","select_template":"default","not_show_feature_image":false,"hide_toc":false},"featured_image_src":"https:\/\/www.kansascity.com\/careers-education\/wp-content\/uploads\/sites\/7\/2024\/12\/What-is-FRM-768x427.png","author_info":{"display_name":"","author_link":"https:\/\/www.kansascity.com\/careers-education\/author\/"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.7 (Yoast SEO v27.7) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>What is Financial Risk Management and What Do They Do?<\/title>\n<meta name=\"description\" content=\"Learn what financial risk management is, what FRMs do, and how to pursue this rewarding career. 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In finance, it\u2019s about protecting a company\u2019s money from things like market changes or bad investments.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/www.kansascity.com\\\/careers-education\\\/financial-risk-management\\\/#faq-question-1733909159563\",\"position\":2,\"url\":\"https:\\\/\\\/www.kansascity.com\\\/careers-education\\\/financial-risk-management\\\/#faq-question-1733909159563\",\"name\":\"What does an FRM\u00ae do?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"An FRM\u00ae analyzes financial risks, measures their potential impact, and develops strategies to reduce or handle them. They work in areas like market risk, credit risk, and compliance, helping companies stay financially secure.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/www.kansascity.com\\\/careers-education\\\/financial-risk-management\\\/#faq-question-1733909166270\",\"position\":3,\"url\":\"https:\\\/\\\/www.kansascity.com\\\/careers-education\\\/financial-risk-management\\\/#faq-question-1733909166270\",\"name\":\"Is FRM\u00ae better than CFA?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"It depends on your goals. The FRM\u00ae focuses specifically on risk management, making it ideal for roles in that area, while the CFA covers broader topics like portfolio management and equity research. Both are highly respected certifications.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/www.kansascity.com\\\/careers-education\\\/financial-risk-management\\\/#faq-question-1733909181326\",\"position\":4,\"url\":\"https:\\\/\\\/www.kansascity.com\\\/careers-education\\\/financial-risk-management\\\/#faq-question-1733909181326\",\"name\":\"What is the salary of FRM\u00ae?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"\\\\u003ca href=\\\"https:\\\/\\\/www.kansascity.com\\\/careers-education\\\/how-much-does-frm-make\\\/\\\"\\\\u003eSalaries for FRMs\\\\u003c\\\/a\\\\u003e are competitive, with a mean annual wage of $118,950 or $57.19 per hour.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/www.kansascity.com\\\/careers-education\\\/financial-risk-management\\\/#faq-question-1733909190722\",\"position\":5,\"url\":\"https:\\\/\\\/www.kansascity.com\\\/careers-education\\\/financial-risk-management\\\/#faq-question-1733909190722\",\"name\":\"Do you need a degree for FRM\u00ae?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"No, a bachelor\u2019s degree isn't \\\\u003ca href=\\\"https:\\\/\\\/www.kansascity.com\\\/careers-education\\\/frm-certification-requirements\\\/\\\"\\\\u003erequired to pursue the FRM\u00ae certification\\\\u003c\\\/a\\\\u003e. However, it is highly recommended for most roles in financial risk management. 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