FRM® Salaries: What Do Financial Risk Managers Make?

When choosing a career path, one of the first questions you’re likely to ask is:

“But…how much will I make?”

The average person will spend 90,000 hours at work. It’d be nice to get more money than “just enough to get by” with a number that enormous.

Fortunately, careers in finance, and especially in risk management, tend to offer great compensation. If you’re considering becoming a financial risk manager (FRM®), here’s what you can expect when it comes to salary levels for FRM professionals.

Key Takeaways

• FRM Salary Ranges: Salaries vary based on location, experience, and industry, but average earnings are strong.
• Impact of Certification: Certified FRMs typically command higher salaries than their uncertified counterparts.
• High-Paying Roles: Top positions like Chief Risk Officers (CROs) in major cities can offer the highest earnings in the field.
• Market Conditions: Risk management salaries are affected by market volatility, regulatory changes, and industry needs.
• Career Growth: The financial industry offers many career advancement opportunities for FRMs, from credit risk managers to regulatory analysts.

What Influences FRM® Salary?

The salary for Financial Risk Managers can vary depending on several factors. Let’s look at some of the main elements that play into how much you can expect to make as an FRM.

1. Experience Level

Your experience plays a critical role in determining your salary as an FRM. Entry-level roles like risk analysts tend to earn less compared to seasoned professionals. For example, senior FRMs or Chief Risk Officers (CROs) with over 10 years of experience can earn significantly more. As you gain expertise, your salary trajectory will rise, often dramatically.

2. Location

Geography plays a huge role in how much FRMs earn. For instance, cities with a large financial sector, such as San Francisco, New York, and London, tend to offer higher salaries due to the demand for skilled financial risk managers. Companies in these areas are often large financial institutions, hedge funds, and asset management firms, which have a greater need for top-tier risk management professionals.

3. Industry

While finance is the primary sector for risk management professionals, salaries can vary depending on the specific industry. For example, risk managers in investment banking or hedge funds often earn more than those in smaller firms or industries like insurance. Specialist roles in market risk, credit risk, or regulatory risk in these high-demand industries also tend to command higher salaries.

4. Certification

Obtaining your FRM® certification from the Global Association of Risk Professionals (GARP) can significantly boost your salary. Certified FRMs are viewed as experts in their field, and this credential can open doors to higher-paying positions at top-tier financial institutions. Certification is often a requirement for senior roles, which gives you a competitive edge in the job market.

5. Market Conditions

The overall state of the financial markets can influence salary levels. In periods of market volatility or regulatory changes, the demand for risk management professionals rises. This increased demand can lead to higher salaries, especially for FRMs specializing in high-risk areas like liquidity, credit, or regulatory compliance.

Salary Breakdown for Financial Risk Managers

Let’s break down the typical salary ranges for Financial Risk Managers and related professionals:

• Entry-Level FRMs: Typically earn between $60,000 and $80,000 per year. These roles include junior risk analysts.
• Mid-Level FRMs: With a few years of experience, FRMs can expect to make $90,000 to $120,000. Roles at this level often involve managing teams and developing more advanced risk strategies.
• Senior-Level FRMs: Senior professionals with 10+ years of experience can earn $150,000+, particularly in roles like Chief Risk Officer (CRO). CROs in top financial institutions can earn even more when bonuses and profit-sharing are factored in.
• Specialized Roles: Positions including market risk analysts, operational risk managers, and regulatory risk analysts generally earn between $100,000 and $130,000, depending on location and experience.

Bonuses and Profit Sharing for FRMs

In addition to a competitive base salary, many FRMs benefit from bonuses and profit-sharing arrangements. These performance-based incentives can significantly boost total compensation, especially in top-tier financial firms. Bonuses for FRMs can range from a few thousand dollars to six-figure sums, depending on the company’s performance and the individual’s contribution to risk management strategies.

High-level professionals, such as Chief Risk Officers, may also receive stock options or profit-sharing packages, aligning their incentives with the company’s long-term success. In some cases, bonuses can make up a substantial portion of an FRM’s total compensation, often exceeding base salaries in investment banks, hedge funds, or asset management firms.

FRM® Certification and Its Impact

Earning the FRM certification is a key step in boosting your salary and career prospects. The certification is recognized worldwide and can open doors to high-paying roles at major financial institutions. Certified FRMs are seen as experts in risk management, with in-depth knowledge of risk models, financial markets, and regulatory frameworks.

This certification also distinguishes professionals capable of managing complex risk issues, making them more attractive to employers and more likely to land senior, high-paying positions.

Financial Risk Manager Career Path

A career in financial risk management offers diverse opportunities for specialization and advancement. You might start as a risk analyst, responsible for assessing potential financial risks. As you gain experience, you could transition into more specific roles, such as a credit risk manager, market risk analyst, or operational risk manager.

For those aiming for the top, the role of Chief Risk Officer (CRO) is the pinnacle of risk management careers. CROs oversee all aspects of risk for a company, from credit risk to liquidity risk and regulatory compliance.

Conclusion

Choosing a career as a Financial Risk Manager offers strong earning potential. FRM salaries range from $60,000 for entry-level roles to over $150,000 for senior professionals, with the potential for bonuses and profit-sharing, adding even more to your compensation. Factors like certification, industry, location, and market conditions all influence salary levels, making this a highly dynamic and rewarding field.

With the right credentials and experience, you could climb the ranks to a senior role like Chief Risk Officer, where salaries can be among the highest in the finance industry.

FAQs