Saturday, July 11, 2009

PRM vs FRM

This is the debacle between two of the most sought after risk management qualification on the market today. This short article would attempt to compare and contrast between the two. For more info please visit http://www.garp.org/ for FRM exams, and http://www.prmia.org/ for PRM and APRM info. Please do note that i held the APRM qualification and is doing the FRM exam in Nov 2009

I am expressing personal opinion on them, I would not be listing facts like salary, enrolment etc as those can be easily found on their website.

Reputation

Without doubt the FRM is more establish and have a long history. The PRM however is backed by famous university like HK university and NUS. But as far as international reputation the edge still goes to FRM.

Width of material

Ok i have did the ARPM, i have not do the PRM, but since APRM covers the entire paper 4 and around 70% of paper 3, i can safely assume that PRM is 2.5X APRM. If that was true my feeling is they both have around the same width, with FRM slightly wider, although i do felt that FRM syllubus is a little bit more quantitative intensive.

Depth of material

This one is no competition. The FRM material is way more in depth. I know you would suspect me to say PRM is better cause i hold the APRM but really FRM is more in depth. Again this is my personal opinion and other may seem to differ.

Difficulty

The PRM exam has 4 papers and you can take it one by one, no need to be in any order. If i am not wrong, if you fail you can attempt the paper 3 months later. FRM is one a year in nov, and one full paper. FRM would have a level one this 2009 nov. In 2010 FRM would switch to 2 levels held in may and nov. I dont think i have to explain that FRM is more difficult because taking one big paper is way tougher than taking 4 small paper, those whom have took CFA exams would get what i am saying. The passing mark for PRM is around 60% and FRM is 70%, putting in other words even if the FRM passing mark is reduced to 60% the FRM still edge in toughness over PRM.

expenses.

The exams fees for the PRM 4 papers are cheaper than the FRM full exam. Also FRM requires you to become a member, PRM do not. As for additional materials, for PRM you would need the books that prmia provide for a fee of cause, and some online learning tools, overall the cost is way cheaper than taking the FRM course, depending on which external material provider and package you use, it can set you back over 1500 sing$. It should cost less than 3/4 this amount for PRM. For PRM you do not really have to seek external material for help, but for FRM the material is so tough, most people cannot handle it without 3rd party material help, again the materials cost depend on what you need, some people may get special discount or even be able to get sponsor from their loving bosses.

But dont be fool by the cost, lets remember that most people take one to two tries to pass each level of PRM exams and also if you pass a paper you do not have to do it the next time, which means lower cost. For FRM if you fail the paper you retake the entire paper next time and most people i know took 2 to 3 tries with some taking more than 5 tires to pass FRM full exams. The 2 levl FRM have not really come out yet so i cannot make any conclusion.

Conclusion

Take the APRM if you are a junior in risk management, or looking to enter into risk management, You can also take it if you are indirectly involve in risk and wish to upgrade your skills. Take the PRM and FRM if you are more directly involve in risk. Most risk managers attempt to do either PRM or FRM, although some did both. Non risk professional may do CFA + CAIA, CFA + FRM, CFA + PRM etc. Do not if you are a CFA, CAIA holder as well as holder of serveral other qualifications PRM do allow paper 1 and 2 to be extempted that would save some cost and time.

So take one of them, discuss with your superior as of which is more of a fuel for your career progression. Determine how much you can spend, this include your time, money, energy. You can even consider doing an advance degree or masters in risk management. There are too many such degree out there and every one of them seem to boost that they are best in certain areas. But no doubt those masters and degrees is unlikely to beat the difficulty of the FRM, CFA exams the PRM and CAIA is easier so maybe they can be "beaten" by some of the tougher masters. Again i have not took master, all my conclusion is from friends doing masters, forum and websites. If you think your master is tougher than CFA and FRM then congrats yourself of getting one hot challege.

13 comments:

  1. It depend with your background and biased. what you say are not true APRM is just one section of the four parts so you have just done 0.25 of the course, PRM is flexible but your can do the four papers at a go in 6.5 hour while full FRM is only 4.5 hour, PRM is full covers risk management while FRM is not refined and still vougue, they have even resorted to two papers the level of coverage in PRM is still far much better than FRM. I agree that FRM has been there for Long than PRM but who address the current and future needs of risk PRM..

    Adauph of Kenya

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  2. PRM and FRM both are certificate for Risk Professionals, The Founder member of PRM were once the director of FRM, for me truly both are Identical in nature,with somewhat PRM and FRM differs 25% in course content, somewhere PRM is good, Somewhere FRM.
    As far as reputation, both have well build repo, FRM is widely known, in my country FRM is locally more renowned...

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  3. You are right in many ways Adauph. PRM is tough. But ARPM does cover more than 1 paper of PRM, it is exempted for paper 4, but its coverage extend to more than half of paper 3.

    In some jobs and countries PRM is better while in other FRM is better. By the way even if PRM is 4x aprm, the FRM is still harder. I know because I do both.

    The FRM paper is 5 hours not 4.5.

    There are something in PRM that FRM does not cover and vice versa so there is no one qualification that covers everything. So it is better to see what your job requires and study accordingly.

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  4. Ok cont from above. No doubt PRM is picking up and given its support it may over took FRM, its too early to say that. I would be doing PRM too after I pass lvl 3 of CFA exams. Cause I feel that I can learn something more.

    My suggestion now is no one can tell which one is tougher it depends on your background and interest and how u look at it. PRM would be more managable since u can split the exam. FRM u can too but only to 2 parts. The tough thing about PRM is u need to pass everything in 2 yr. FRM u need to pass in 4 yrs after u pass lvl one, so FRM have longer time, which sort of make it easier.

    Also if u hold qualification like CFA you may give PRM the edge since they give 2 paper exemption.

    So in summary

    PRM edge
    Allow exemptions
    cheaper
    no experience needed
    can take and attack paper seperately
    Some countries may have high or even higher reconition for PRM then FRM. In Singapore since NUS "supported" PRM it is gaining reputation.
    More qualitative in nature.


    FRM edge
    Long run reputation
    International reputation
    More quantitative in nature

    whats similar
    Difficulties, they each have their own difficulties but FRM is slightly tougher, and yes I know the total time for PRM 4 papers is tougher than one full or 2 part FRM. But some people may think FRM is easier, again it depends on your own strengnth and weakness. I can confirm with you after I took the FRM in 2009 lol.

    Members: Last seen PRM has 65k member, I dont know how many are PRM or APRM or just sign up for fun, GAAP members I have no idea.

    Maintainence cost: PRM u no need pay annual cost. Although u can pay for "premium package" give u some benifits. FRM u must pay to maintain your status. So in terms of this PRM edge out. A car that does not use petrol is alway better than a car that use petrol lol.

    Growth: Well this one is where PRM may have edge, it is still in teenage stage and has lots of potential to go, FRM may be mature already.
    So I recommend ppl to take PRM early because the passing rate is going to drop. Just like CFA exams started with over 80% pass rate but drop to 40% over time. I cant tell which one would be stronger in the future but I would be sure that many employer would consider both qualification as an edge.

    exam location: This one depends. The FRM 2009 is held in SIM headquaters in Singapore (for god sake pls do not end up at Singapore EXPO!!!). For PRM u can take it at a few location so location wise PRM edge. Clementi is very far from where I live Lol.

    flexibility: no doubt PRM wins

    Applications to real life: Hard to say depending on your job really.

    Salary: Ok this one is hard to compare because a of PRM do not have 4 yrs expereience but all FRM has since it is a requirement, and there is no data to compare, even if there is it differs from company to company, job to job places to places

    Career progression: Hard to say too, it depend on your path so best speak to your HR and bosses b4 making the choice.

    My conclusion

    Speak to both PRM and FRM do keep in mind that they would say theirs is the best. Speak to those that held both qualification and is doing both. Speak to your employers to ask them which one aids your career better. I would not know which one is better for your advancement only you and your company knows. Note the ans differs in every job, countries and company. So it is best to do your own research.

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  5. Pardon me, the FRM experience is 2 yrs not 4, 4 should be CFA required experence. PRM does not require experience. Although a lot of PRM are experienced as well, there is no official stats to show the %

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  6. where to get relevant course material for PRM apart from PRMIA. Like for some certification you have certain course, if you do that it will cover everything.

    e.g. for PHR its SHRM

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  7. Hi, is Associate PRM difficult for some1 who has a 2nd Upper Finance Degree from local U?

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  8. Yes , it would be difficult because i did it while holding a bachelo'rs from AUS american U Sharjah accredited by AACSB and nearly passed 66%.

    I studied fiance as well. I didn't take any risk management courses that were entitled (Risk Management)

    However, much of the finance courses like Investment, 101, corporate, international trade cover much of the material you are going to get exposed to.

    my opinion is that since it's a one exam certificate and You are interested, might as well give it a go.

    all the best

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  9. Let me correct on one thing, PRM pass mark is 70% not 60%.

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  10. I've got a Mathematics Degree and I personally think the PRM Exam 2 is quantitative and for those who do not have a background in math your going to have to put the work in.

    I chose PRMIA simply because FRM (GARP) seems was too money orientated. Some of the most famous people who write text books in this sector have written or support PRMIA (Wilmott, Moorad Choudhry, John Hull etc).

    Look at the end of the day, if you want to support an organisation which is focussed on providing academic principals to the Risk Management profession, choose PRMIA.

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  11. Hi, I am a credit approver working in a small finance institution with money lender license. My main role is to review and approve different loan products (for both personal and SME customers) and factoring deals. I worked in the bank few years ago but it was operation related - loan documentation. Now i wish to rejoin into banking field, and would like to pursue my career as a credit approver. Shall I take CPA, CFA, FRM or PRM?

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  12. Hi All,

    Recently, there are updates to PRM exam sitting requirements, so please be aware.

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