Difference Between FRM and Actuary

FRM is the full form for the Financial Risk Manager. It is organized by GARP (Global Association of Risk Professionals), USA, where individuals with this degree can secure a job in IT, KPOs, Hedge Funds, Banks, etc. In contrast, Actuary is organized by CAS (Casualty Actuarial Society) and SOA (Society of Actuaries); individuals with this degree can apply to work in insurance companies.

There is a common question among students who like to become risk professionals- What should I choose, FRM or Actuary? This article will answer everyone’s query. In this article, we will discuss both of these certifications in-depth to make an informed decision about what you should prepare. However, one must understand that the scopes of both these courses are different. Not everyone prefers in-depth professional studies. Likewise, not everyone will allow the idea of pursuing a professional approach that touches the surface level of risk management. So, choose according to needs. Here are some details to begin with.

  • The curriculum of the Actuary is deeper than FRM. That does not mean FRM scratches on the surface. But Actuary is deeper.Also, if someone wants to opt for both courses, it is prudent. Even if the curriculum of FRM & Actuary consists of risk management, they are of different domains and need particular focus.If a candidate wants to go to the insurance sector, they must choose an actuary. The curriculum of the actuary is vast, and once they clear 3-4 papers initially, they can get a job in the insurance sector. Truly, an actuary is very valuable.Considering FRM certification, doing just FRM is not enough. It will help if a candidate pursues FRM after achieving a degree like MBA in Finance or CFAMBA In Finance Or CFACFA focusses on imparting skills associated with Investment Management including Investment Analysis, Portfolio Strategy, Asset Allocation, and Corporate Finance. MBA focusses on overall Management Skills like Marketing, Operations, Finance, Human Resource Accounting, etc.read more. CFA plus FRMCFA Plus FRMCFA (Chartered Financial Analyst) certification exam prepares you well for careers in Investment Banking, Portfolio Management, Financial Research, whereas FRM (Financial risk management) certification exam is suited for those who want to make a career in Risk management in Banks, Treasury Department or in Risk Assessments.read more creates a lethal combination and will be easier to get a job. Although the scope of CFA and FRM is drastically different, opting for these two courses will help see the big picture and set it up better to solve larger issues in finance.

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FRM vs. Actuary Infographics

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Let us understand the difference between these two streams with the help of the below FRM vs. Actuary infographics.

FRM vs. Actuary – Comparative Table

What is the Financial Risk Manager (FRM)?

  • FRM is one of the most sought-after risk certifications globally. Whether looking to pursue a career in finance or looking to break into the finance domain, FRM certification acts as a catalyst since people receiving FRM certifications are sincere about being risk professionals.FRM is a demanding certification, as most students think before getting into it. To complete FRM, an aspirant needs to give two rigorous, practice-oriented papers that include core subjects in financial riskFinancial RiskFinancial risk refers to the risk of losing funds and assets with the possibility of not being able to pay off the debt taken from creditors, banks and financial institutions. A firm may face this due to incompetent business decisions and practices, eventually leading to bankruptcy.read more management. Also, requires two years of financial risk management experience to avail of the FRM certificate.FRM is often not perceived as per corporate merit because there is an imbalance between the curriculum and the exam. Comparatively, the exam is easier than the depth of the curriculum. Thus to make a mark, a candidate should not study just for the exam but also for knowing the subject intensely.There are no eligibility criteria for FRM; anyone can appear.

What is Actuary?

  • An actuary means a business professional who uses analytical methods to understand the financial consequences of risk. Actuary professionals are exceptional at economic theories and have in-depth knowledge of mathematics and statisticsStatisticsStatistics is the science behind identifying, collecting, organizing and summarizing, analyzing, interpreting, and finally, presenting such data, either qualitative or quantitative, which helps make better and effective decisions with relevance.read more. If an applicant wants to go for an actuary, consider the inclination toward these two subjects.Actuary professionals focus on a particular type of risk. For example, they deal with threats related to insurance and pension programs. Once they understand these sectors’ risks, evaluate the possibility of the events, find ingenuity to reduce the potential, and eventually try to pare down the impact of these possible events.It is one of the newly evolved finance careers Finance CareersA appropriate degree, such as a B. Com, CPA, or MBA, is required to pursue a career in finance. Then one can choose from a variety of financial careers such as equity analyst, investment banking, asset management, risk management, corporate finance, and so on.read more. So becoming an actuary (will know-how in a minute) can be counted among top-wage earners in the country.The candidate must pass a series of examinations via the Casualty Actuary Society or Society of Actuaries to be an actuary.It may take around 6-10 years to clear all the exams. But after passing a few entry-level exams, they may get hired as entry-level professionals. Then they can take subsequent exams while working as an actuarial assistant.

Key Differences – FRM vs. Actuary

There are many differences between FRM and Actuary. The only similarity is they cater to risk professionals.

  • Quantitative Analysis

  • Financial Markets & Products

  • Valuation

  • Risk Models

  • Credit Risk, Market Risk & Operational Risk

  • Investment Management

  • Treasury & Liquidity Risk Management

  • Regulation & Financial Reporting

  • Modern Actuarial Statistics

  • Estimation of Policy Liabilities

  • Insurance Company Valuation

  • Enterprise Risk Management

  • Financial Mathematics

  • Financial Economics

  • Advanced Ratemaking

  • Financial Risk & Rate of Return

  • Risk Manager

  • Financial Risk Consultant

  • Risk Analyst

  • Investment Banker

  • Property & Casualty Insurance Actuary

  • Pension & Retirement Actuary

  • Life Insurance Actuary

  • Health Insurance Actuary

  • The exams under SOA started in 2021 and will continue till October 2022. For more information, refer link.

  • The exams under CAS will take place during April 2022 and May 2022. For more information, refer link.

  • Intensity: If you think about going into depth in each certification, the actuary is much more intense than FRM. Surely, one needs to study at least 200 hours to prepare for FRM; but one may need much more for an actuary because it consists of approximately 8-9 exams.The focus of subjects: With a good knowledge of financial theory and valuation, one can crack two exams of FRM. But to become an actuary, only learning economic theory is not enough. It also requires having in-depth knowledge of mathematics and statistics.Perspective: The main difference between FRM and Actuary is not subject-oriented but philosophical. In the case of FRM, it needs to be more generalist than a specialist, whereas, in an actuarial science professionActuarial Science ProfessionActuarial Science evaluates the various risks associated with the field of finance. The use of mathematics and statistics, which is its prime focus, is used to analyze the uncertainty of future events and their financial implications.read more, emphasis should be on the specialty. Moreover, when opting for FRM, it is usually a keen interest in business and finance. In contrast, part and parcel of actuarial science evaluate the risk of insurance/retirement/pension programs and undertake measures to reduce the risk.Value in the market: The market value of the FRM certification holder is great. But, Actuaries have more weight in the market due to two basic reasons. Firstly, Actuary is a relatively new finance profession in the market (of course, it started a long time ago, but very few opted for it in the past). Secondly, if it is completed with sincerity, it does not need other qualifications to get a job. But in the case of FRM, to be counted, one must have at least an MBA in finance.The difference in salary: At a global level, there is not much difference in the salary part of both FRM and Actuary. But Actuary is paid a bit higher than the FRM professionals. On average, the Actuary earns around $200,000 per annum, whereas an FRM professional earns about $175,000 per annum.

Why pursue FRM?

  • The first reason to pursue FRM is its eligibility criteria. It just needs the willingness to do the course and not adhere to anything else to sit for the exam.The second reason is its curriculum. It has only two levels. Most definitely, this course requires rigorous study to get placed. But it has only two groups to pass and nine subjects.The third reason is its international reputation. Few courses have such a royal reputation in the world.The fourth and last reason is the fees. This course is very reasonable compared to the other available international professional program. Moreover, it helps get placed provided that the curriculum is properly analyzed.

Why pursue Actuary?

  • If thinking of pursuing a specialist profile, an actuary is appropriate. The actuary is an uncompromising course for insurance risk. After completing this course, one can be an expert in insurance risk.The curriculum of the actuary is very comprehensive. Thus once earnestly completed, it is good to go. Moreover, as an actuary is a relatively new profession, it can widen more opportunities in the market.If deciding to opt actuary from CAS or SOA, may consider an internationally certified certificate that will be valid anywhere in the world.

In the final analysis, it is evident that if someone wants to study a specialist profile and is willing to devote 6-10 years of life, they can choose Actuary. But, on the other hand, if an aspirant wants to pursue a career in risk profileRisk ProfileA risk profile is a portrayal of the risk appetite of an investor. It is done by assessing an individual’s capacity, interest, and willingness to take and manage risks. Preparing it helps financial advisors to assist clients in making effective investment decisions. read more in banks and large funds, FRM is the right option.

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