If you wish for a challenging job profile with a lucrative bank balance, then a financial risk manager (FRM) could be the right career for you. There is tough competition among organisations to hire a certified FRM or financial risk manager. The rise in demand shows in the shift in the structure of the FRM salary in India. A certification in FRM increases your potential, lets you compete for better job opportunities and guarantees you a successful future and a better risk manager salary. Let us dig deeper to understand what FRM exactly is and what can you earn if you certify as an FRM in India.
Did you know?
The demand for a certified FRM in India has grown by 63% in the last two years.
Who is a Financial Risk Manager?
A Financial Risk Manager (FRM) is an excellent career option, and many enter this job stream for better career growth. This field also offers lucrative salaries. Financial risk management is a very sought-after career stream today, but it is highly challenging. The qualification is for the risk management professionals who are concerned with analysing, controlling and evaluating the possible liquidity uncertainty, credit risk, and the market and the non-market financial risks.
The FRMs conduct various risk management assessments in government agencies, investment banks, asset management firms and corporations. A career as a financial risk manager is apt for those who can regularly take calculated risks. They should be:
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Ready to work under tremendous pressure and undertake huge monetary transactions.
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Able to work on the finance application with ease.
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Well-versed with the state of the market and the industrial conditions in the region where they work.
In order to become an FRM, you need to complete a two part comprehensive examination. You also need to have two years of work experience in the financial risk management field.
Responsibilities of a financial risk manager
Here is the list of responsibilities that an FRM has to undertake daily.
- The professionals analyse and identify which assets of a business can bring in profits and identify the risks associated with the others.
- They analyse the data, the financial markets and world events to determine the trends and changes that can impact the business.
- They also implement and suggest strategies for protection of a business and its assets.
Let us understand the reason behind the demand and popularity. The FRM designation is recognised globally as a gold standard for risk management professionals. There have been potential credit and market risks in the last decade, which has led to a rise in demand for qualified FRMs capable of defining the risk precisely and clearly. This has increased demand for the FRMs.
FRM Scope in India
The FRM has exceptional knowledge of risk management techniques and qualitative and quantitative skills that helps him to specialise in specific roles. Typically the scope of FRM in India includes:
- Managing the market risk. Managing the losses which occur due to factors that affect the financial markets. For example, recession and change in interest rates.
- Managing the credit risk by managing the risk of delay or default in the borrowed fund repayments.
- Recognising any threat to an organisation and then taking the appropriate steps to minimise them.
- Estimating the risk quantum that a company faces.
- Making any relevant recommendations to the management to minimise the risk.
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Role of an FRM
The role of the risk analyst is as follows:
- To build financial models using the historical data and price forecast on various bank related metrics.
- Conducting the scenario analysis based on micro and macro factors that help assess the financial sector's risk.
- Ensure accurate modelling of the allocated portfolio and develop a new transaction model to enhance the existing model.
- Identify the major financial and non-financial risks and recommend action for risk mitigation.
- Apply appropriate scenario and sensitivity analysis to support the regulatory measures.
Skills found in the FRM individuals
The FRM certification helps in building specific skillsets. Some of them that are common are:
- Research and strategy
- Trading
- Model building and valuation
- Product management
- Portfolio management
Risk managers may add value to the organisation by working in certain functions like treasury, audit, accounting and control and regulatory compliance. They may consult clients, give them insights on their risk appetite, and help them maximise returns on a risk-adjusted basis.
Career roles for the FRM
Here are the top professional roles that fit a certified FRM. Some of them are:
- Financial Manager
- Risk Qualification Manager
- Corporate Risk Director
- Risk Management Analytics Consultant
- Regulatory Risk Analyst
- Analytics Client Consultant
- Operational Risk Analyst
- Credit Risk Specialist
- Enterprise Risk Manager
- Large Enterprise Commercial Risk Manager.
Each of these roles has a different remuneration and job description. The risk manager salary in India depends significantly on your experience and the employer recruiting you.
Certified FRM salary range based on a career role
Here are the FRM career roles and the risk management salary offered for each role with the highest starting salary in India.
Average financial risk manager salary in India is:
- Risk Analyst earns an average annual salary of ₹590,000
- Senior Risk Manager earns an average annual salary of ₹2,000,000
- Risk Manager earns an average annual FRM salary of ₹10,00,000
- Credit Analyst earns an average annual salary of ₹800,000
- Credit Manager earns an average annual FRM average salary in India of ₹860,000
- Chartered Financial Analyst (CFA) earns an annual salary of ₹7,00,000
In India, FRM professionals have significant professional growth opportunities. Their industry experience and academic qualification also determine their average financial risk manager salary in India which leads to a gradual salary increase.
Average FRM salary in India
On average, an entry-level FRM will earn ₹9,00,000 in India. The level of experience, the level of academic qualification and the company that the professional works for are the key determining factors for a person’s salary.
FRM salary by experience
Whatever career field you choose, your e xperience counts and is the key determining factor of your salary.
- An entry-level FRM will earn an average of ₹5 lakhs with less than one year of experience.
- A person with 1 to 4 years of experience can expect to earn ₹7 lakhs
- A mid-career FRM with around 5 to 9 years of experience should expect to earn roughly ₹11 lakhs
- An experienced FRM with 10 to 19 years of experience can earn over ₹15 lakhs
FRM Pay by location
In a city like India, location also determines how much you can expect to get paid as an FRM. Listed below are the cities and the percentage over the national average paid to the FRMs.
- Gurgaon- 36%
- Bangalore – 25%
- Chennai – 11%
- Mumbai- 5%
- New Delhi- 2%
- Pune- 1%
- Hyderabad – 0%
The salary of an FRM includes:
- Base salary
- Bonus and profit-sharing
These add up to get the total FRM compensation
Top employers who pay high salaries to certified FRMs
The need for an FRM is high in the banking sector, insurance companies and certain financial institutions. This is because these sectors deal with core finance and constitute monetary investments. Therefore, having an FRM with an understanding of risks can aid in mitigating any financial loss. We have top companies like JP Morgan and ICICI bank in the banking industry, Moody’s and CRISIL in the credit rating sector and the insurance industry and certain hedge funds and investment banks that hire FRM certified professionals.
There are companies in the IT and energy sector too that have to deal with several kinds of risks, and they thus need to run an efficient FRM management team.
Industries that employ FRMs
- Investment Banks
- Commercial Banks
- Central Banks of Countries
- Insurance Companies
- Asset Management Companies
- Credit Rating Companies
- Consulting Firms
- Government and Regulatory Agencies
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Top Companies that recruit FRMs are ICBC, Citigroup, KPMG, Deutsche Bank, UBS, Credit Suisse, PWC, etc.
Top Banks that recruit FRMs are Bank of America, Wells Fargo, JP Morgan Chase, Banco Santander, etc.
FRMs employed by the government banks in India
The government sector banks also recruit applicants for risk management positions. Here is the financial risk management salary.
- The Central Bank of India
The Central Bank of India is a leading public sector bank that invites risk managers and credit officers applications in the middle management group. Interested candidates need to apply online, and they have to appear for an online examination based on which they get shortlisted.
The financial risk manager salary of a yearly Central Bank risk manager is as under:
Credit Officer - ₹35000- ₹125000
Risk Managers - ₹30000- ₹80000
- Financial risk manager salary in other banks:
Here is a list of a few banks alongside their average monthly salaries of an FRM-
Bank of Baroda: ₹56,825 per month
Bank of India: ₹50,168 per month
HDFC Bank: ₹18,794 per month
Union Bank of India: ₹43,097 per month
IDBI Bank:₹68,318 per month
Axis Bank: ₹22,140 per month
- NABARD risk management
NABARD recruits individuals for the assistant risk manager and risk manager post. The candidates are shortlisted for interviews based on their experience and qualification.
The salary of a NABARD risk manager is ₹250000-300000 per month.
- RBI
The salary of a risk analyst working in RBI is ₹2,820,000 - 3,360,000 per year. When the positions are open, the candidate has to apply online on the bank's website and sit for the examination. The candidate should have a relevant post-graduation degree and possess the core competencies of being a risk analyst.
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Conclusion
The FRM is a leading certification in risk management and is awarded by the global association of risk professionals or GARP in the USA. With an increase in competition in the job market, it is inevitable for professionals to show skills and knowledge that are indispensable and globally recognised. Earning the FRM certification salary lets a risk manager prove his value to his employer. The FRM is a globally acknowledged designation that equips professionals with risk management and financial risk assessment skills. The professionals are acquainted with managing credit, market, and liquidity risk principles. The FRM professionals are usually paid better than the non-credentialed peers who value this designation.
