What Is a Financial Risk Manager?

Financial risk managers (FRMs) help businesses face challenges in an era of economic uncertainty, including economic downturns, market volatility, and changing regulations. If not appropriately managed, such risks—regulatory fines, customer loss, or high employee turnover—can negatively impact businesses, resulting in financial losses and decreased revenue. Financial risk managers play a critical role in helping companies overcome various financial risks and remain stable despite uncertainty. As a professional adept at mitigating risks related to finances and economic assets, FRMs are highly sought after by businesses in various fields such as health care, engineering, natural resources, and technology. Working as an FRM could be a lucrative career path because the global risk management market continues to grow from $210 billion in 2024 to an estimated $310 billion in 2028 [1].

Explore the vital role of FRMs in a company’s financial landscape and the knowledge and skills you’ll need to become a certified FRM.

What is a financial risk manager (FRM)?

FRMs are certified risk management professionals specializing in identifying company financial and economic health threats. Leveraging their understanding of risk management concepts, FRMs develop strategies to counteract or reduce the effects of risks on a company’s financial asset management and economic value. FRMs receive accreditation in the form of a certification from the Global Association of Risk Professionals (GARP), making them strongly capable of monitoring and mitigating financial risks in real-world scenarios. 

FRMs monitor risks to a company’s assets, earning potential, and success. By analyzing their clients' investments and financial assets, financial markets, and global trends, FRMs predict changes that can hamper a company’s finances and recommend or implement strategies to overcome negative financial outcomes. They may also advise on opportunities to take advantage of risks and increase returns, suggesting which risks have a lower negative impact and how to manage them effectively to generate profits.

FRMs may specialize in different areas of risk, including market risk, credit risk, liquidity risk, and operational risk. FRMs can work in various financial sectors, such as banking, loan origination, trading, marketing, insurance, asset management, or sales. 

What does a financial risk manager do?

As an FRM, your day-to-day duties may depend on where you work, but some of your responsibilities may include risk identification, analysis, and mitigation. Explore some of these common FRM responsibilities in more detail:

• Risk identification: One of your primary responsibilities as an FRM is assessing your client’s financial risks. This involves analyzing your client’s financial data and identifying potential risk areas. For example, you might discover that the market is too chaotic for your client or that the business is having trouble paying its debt.

• Risk analysis and measurement: FRMs use statistical modeling and simulation tools to quantify and analyze the extent of the risk. These statistical methods and simulations form a risk model accessed through specialized software. 

• Risk-based recommendations: FRMs may use the information from the risk analysis to suggest whether the client should take a financial risk, depending on the potential rewards they stand to gain versus the severity of the risk. For example, an FRM working in a bank may review a customer’s history to determine if they are a good candidate to recommend for a loan.

• Risk mitigation: Another essential task of an FRM is to develop a risk management strategy to reduce or overcome risks to a client’s finances, allowing them to adapt to changes and capitalize on growth opportunities. This may also involve creating contingency plans for emergencies. 

• Risk reporting: As an FRM, you must also outline and explain the risks and solutions to decision-makers, clients, or senior management. You may need to create reports or presentations to clarify this information.

• Risk prediction: FRMs may conduct scenario analyses by considering current financial markets and global events to predict possible severe market fluctuations.

Financial risk manager skills

FRMs need various skills, such as technical knowledge, software proficiency, and analytical thinking, to efficiently carry out their responsibilities. Take a closer look at the skills you may need to develop for this career:

• Business and financial acumen: Strong knowledge of finance concepts and experience working with numbers in different scenarios, such as contract for difference (CFD) trading. You also need an understanding of regulatory and compliance standards. 

• Technical knowledge: Keen understanding of the various types of risks, risk management methodologies, financial modeling, and risk assessment techniques 

• Software proficiency: Effectively utilizing tools, software, or programming languages for data analysis, risk identification, and statistical modeling. For example, you need to know how to apply the value at risk (VaR) statistic to measure potential losses when your company is considering an investment.

• Analytical thinking: Excellent strategic analysis skills in interpreting data, identifying patterns, and forming an effective risk mitigation strategy that aligns with the company’s objectives

• Communication skills: Strong communication skills to effectively convey complex technical concepts and solutions to different stakeholders, audit committees, and clients

• Adaptability: Continuous learning and ability to adapt risk management strategies to emerging risks and changing situations while ensuring the organization adjusts to regulatory changes.

Financial risk manager salary and job outlook

As of April 2025, Glassdoor estimates that the average annual salary of financial risk managers is $121,171 [2]. Rising economic uncertainties have led to an increase in the demand for risk management professionals across industries. Additionally, emerging regulations, market fluctuations, and cyber threats have amplified the need for effective financial risk management. The US Bureau of Labor Statistics (BLS) predicts that financial management jobs, which include financial risk manager roles, will grow 17 percent between 2023 and 2033, much faster than the average for other fields [3].

How to become a financial risk manager

If you intend to enter the field of financial risk management, you typically need at least a bachelor’s degree and the FRM certification offered by GARP. Explore a more in-depth look at how to become a financial risk manager:

Educational requirements

To become an FRM, you’ll first need a bachelor’s degree in finance, economics, risk management, business administration, or a related field. Some employers might prefer a master’s degree, such as an MBA or a PhD in a related field. You can also consider an internship in a risk management role to help you gain experience. If you intend to work as an FRM in investment banking or securities, you must also take the Financial Industry Regulatory Authority (FINRA) qualification exams. You can find more information on the FINRA website.

FRM certification

Employers consider the FRM certification offered by GARP as the “gold standard” for FRM professionals, as it demonstrates proficiency in risk management concepts validated by international standards. To become certified, you need to pass two multiple-choice exams. You also need to submit evidence of at least two years of full-time work experience relevant to this field, and you need to submit this within 10 years of passing the second part of the exam to obtain your certification. GARP recommends that you engage in its Continuing Professional Development (CPD) program after getting certified to stay current with trends and practices in risk management. 

Get started as a financial risk manager with Coursera

A financial risk manager identifies, analyzes, and reduces risk in an organization, ensuring its financial health and stability. Take your first steps to becoming an FRM with the Google Data Analytics Professional Certificate on Coursera, where you can comprehensively understand organizing and cleaning data for practical analysis. This concept can be beneficial for risk identification. You might also enroll in the Google Project Management: Professional Certificate on Coursera, where you can build your understanding of project management, a skill necessary for developing efficient risk management plans.