How to Pass FRM Exam: Study Strategies for Success

How to Pass the FRM Exam: Best Study Strategies for Success

Passing the FRM exam is a significant milestone for professionals pursuing a career in risk management. As one of the most challenging certifications offered by the Global Association of Risk Professionals (GARP), the Financial Risk Manager (FRM) exam requires a solid preparation strategy, a deep understanding of risk concepts, and disciplined time management. Whether you are preparing for FRM Part 1 or FRM Part 2, having the right study plan is essential.

This blog will guide you through study strategies, exam insights, and tips on how to pass the FRM exam on your first attempt.

Understanding the FRM Exam Structure

Before diving into study strategies, understanding the FRM exam’s structure is crucial. The exam is divided into two parts:

FRM Part 1: Fundamentals of Risk Management

• Content Focus: This part covers the essential risk management tools and the theories underpinning financial risk concepts. It includes:
  • Foundations of risk management
  • Quantitative analysis
  • Financial markets and products
  • Valuation and risk models
• Format: 100 multiple-choice questions.
• Time Commitment: Around 150–200 hours of study time.

FRM Part 2: Advanced Risk Management

• Content Focus: Builds on Part 1 and dives deeper into complex risk management strategies, including:
  • Market risk
  • Credit risk
  • Operational risk
  • Liquidity risk
  • Current financial market issues
• Format: 80 multiple-choice questions.
• Time Commitment: Approximately 200–300 hours of preparation.

Understanding these fundamentals helps you structure your study plan to cover all essential topics. 

Pro Tip: Review the GARP curriculum and the detailed learning objectives (LOs). These provide insight into what GARP expects you to know and how they may test you.

Top Study Strategieson how to Pass the FRM Exam

Now that you know the structure, here are the best strategies to help you pass the FRM exam:

1. Create a Structured Study Plan

The FRM exam requires a significant time commitment. Most candidates spend between 200 and 300 hours preparing for each part. However, the actual time you’ll need depends on your background:

• You may need less time if you have a strong foundation in quantitative analysis or finance.
• You must allocate more time to the core quantitative subjects if you’re from a non-finance background or haven’t studied mathematical topics. 

Steps to Create an Effective Study Plan:

• Early Start: Begin preparing at least 4-6 months before the exam. This gives you enough time to digest the material without cramming.
• Weekly Goals: Break down the curriculum into weekly goals, dedicating a specific amount of time to each section based on weight. For instance, spend more time on topics like Valuation and Risk Models (30%) than Foundations of Risk Management (20%).
• Active Review: Schedule weekly reviews to consolidate what you’ve learned and ensure you’re not falling behind.

Pro Tip: As the exam approaches, shift your focus to weaker areas and dedicate time to practice questions to enhance your problem-solving speed. 

2. Focus on Key FRM Topics

The FRM exam covers many topics, but some areas carry more weight than others. Prioritize studying the core concepts that are frequently tested:

• FRM Part 1 Key Topics:
  • Quantitative analysis (20%)
  • Foundations of risk management (20%)
  • Financial markets and products (30%)
  • Valuation and risk models (30%)
• FRM Part 2 Key Topics:
  • Market risk (25%)
  • Credit risk (25%)
  • Operational risk (25%)
  • Liquidity and treasury risk (15%)
  • Current financial issues (10%)

Knowing where to focus your efforts can help you manage your time more effectively.

3. Use Official FRM Study Materials

GARP provides its core readings, which form the basis for the exam. However, many candidates opt for third-party resources like Kaplan Schweser or Bionic Turtle for structured study guides and question banks. These resources can simplify dense topics, provide summary notes, and offer valuable practice questions.

How to Use These Effectively:

• Kaplan Schweser Notes: These condense the core readings into digestible summaries, making it easier to understand key concepts. Use them as your primary study material, but always refer to GARP’s original readings if a concept isn’t clear.
• Practice Questions: Kaplan’s QBank or Bionic Turtle’s practice questions are essential for mastering the multiple-choice format of the FRM exam. Practicing these questions will improve your ability to apply theoretical knowledge to practical problems.

Pro Tip: Don’t just rely on memorizing formulas. Focus on understanding when and how to apply them, as the exam tests practical application more than theoretical knowledge.

4. Master Quantitative Analysis and Risk Models Early

For many candidates, the quantitative analysis and valuation and risk models sections are the most challenging due to the technical and mathematical nature of the content. Since these areas collectively represent 50% of the Part I exam, you must master these topics early in your preparation.

Strategies:

• Start with the Basics: Build a strong foundation in probability theory, statistics, and regression analysis. These topics form the backbone of many risk models.
• Focus on Application: Don’t just learn the theory behind VaR (Value at Risk) or credit risk models; focus on their application. For example, practice using Monte Carlo simulations or calculating portfolio VaR under different scenarios.
• Consistent Practice: Set aside time every week to work through quantitative problems. This consistent practice will reinforce your understanding and improve your calculation speed, which is crucial during the exam.

Pro Tip: Review past FRM exam questions to see how GARP phrases quantitative problems. This can help you anticipate the types of questions you’ll face.

5. Master Time Management During the Exam

One of the biggest challenges in the FRM exam is the time pressure. With 100 questions in Part I and 80 in Part II, you’ll have approximately 2.5 minutes per question. This can be stressful, especially when faced with complex quantitative questions.

Key Strategies:

• Timed Practice Exams: Take several full-length, timed practice exams to get used to working under pressure. Simulate exam conditions as closely as possible, including taking breaks at the same intervals.
• Prioritize Questions: Avoid getting stuck on difficult questions when taking the exam. Tackle more straightforward questions first to build confidence and save time for more challenging ones later.
• Answer Elimination: The FRM exam often presents multiple-choice questions with similar answers. Develop the skill of eliminating incorrect answers quickly. This can help narrow options and improve your guessing strategy when needed.

Pro Tip: GARP does not penalize for wrong answers, so never leave a question blank. If you’re running out of time, make educated guesses.

6. Join FRM Study Groups

Studying with a group can enhance your understanding of complex topics. FRM study groups are an excellent way to share resources, ask questions, and stay motivated.

Benefits of Study Groups:

• Collaborative learning: Discuss complex concepts and clarify doubts with peers.
• Motivation: Studying with others helps keep you accountable and on track.
• Resource sharing: You can exchange notes, study materials, and tips for tackling tricky topics. 

7. Understand the Conceptual Framework in Part II

For Part II of the FRM exam, GARP tests your ability to apply risk management techniques to real-world situations, particularly in market and credit risk. The exam focuses less on calculations and more on understanding risk management frameworks, regulations, and case studies.

Study Tips:

• Stay Updated on Current Issues: Part II includes a section on current financial market issues. Stay informed about recent regulatory changes, central bank policies, and market developments that could be relevant to the exam.
• Focus on Case Studies: Part II often tests your ability to analyze real-world financial disasters and the lessons learned. Study the key details and outcomes of cases like the 2008 financial crisis, the Barings Bank collapse, and the Long-Term Capital Management (LTCM) debacle.
• Deepen Your Understanding: Go beyond memorizing definitions—understand the rationale behind risk management practices, such as why specific capital requirements are imposed or how liquidity risk is mitigated in practice.

Pro Tip: GARP’s recommended readings for Part II are extensive. Use condensed study notes (e.g., Schweser) to focus on the key points, but don’t neglect the depth required to understand real-world applications fully.

8. Don’t Ignore Mental and Physical Preparation

Preparing for the FRM is not only a mental exercise; it also requires physical stamina. Long study hours can lead to burnout, which can affect focus and performance during the exam.

Strategies to Stay Sharp:

• Scheduled Breaks: Incorporate regular breaks into your study plan to avoid burnout. Use techniques like the Pomodoro method (25 minutes of focused study followed by a 5-minute break) to maintain high productivity.
• Healthy Habits: Maintain a balanced diet, get enough sleep, and engage in physical activity. Your brain will function better if you’re physically healthy.
• Simulate Exam Conditions: On the exam day, eat a light breakfast and bring healthy snacks to maintain energy during the 4-hour session.

Pro Tip: Use meditation or mindfulness techniques to reduce anxiety and improve concentration, especially as the exam date approaches.

9. Review, Review, Review

The last few weeks before the exam are crucial for consolidating your knowledge. You should have completed the curriculum, tackled practice questions, and taken mock exams by now.

Final Steps:

• Target Weak Areas: Focus on the sections where you performed poorly during practice exams.
• Formula Sheet: Create a personalized formula sheet with all essential equations and concepts. Review this regularly so that the information is fresh on exam day.
• Exam Strategy: Plan your approach for exam day, including how you’ll manage time when you’ll take breaks and how you’ll handle difficult questions.

Pro Tip: In the final week, focus more on practice questions and less on reading new material. Your goal should be refining your test-taking strategies and reinforcing what you already know.

Conclusion: How to pass the FRM exam

Passing the FRM exam from GARP requires intelligent study strategies, effective time management, and using the right resources. Creating a structured study plan, focusing on critical topics, taking regular practice exams, and utilizing study groups can significantly improve your chances of passing  FRM Part 1 and FRM Part 2 on your first attempt.

Start your preparation today by exploring the best study materials, joining study groups, and practicing time management to ensure you’re fully ready for exam day.