FRM Exam Difficulty Level: What to Expect in Part I & II

Abdul BasitSeptember 25, 2025

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Studying for the FRM exam can create anxiety, especially when attempting to judge the difficulty of Part 1 and Part 2. The challenges of both parts are designed to assess your knowledge and ability to apply risk management concepts to practical situations. Part 1 identifies foundational concepts in subjects such as quantitative analysis, risk management basics, and financial markets, enabling you to establish a strong technical foundation. The struggle here is conceptualizing wider topics and building analytical ability.

Part 2 prepares you to think conceptually and advance to practical, complex, and integrated risk management issues, including topics such as credit risk, operational risk, market risk, contemporary issues in financial markets, and liquidity risks. In general, Part 1 of the Financial Risk Management exam is formula-driven. In contrast, Part 2 is more conceptually challenging, as you will need to apply analytical thinking and conceptual knowledge to cases, considering how risks may interact in a heterogeneous space. Both parts allow you to balance technical proficiency with illustration.

Table of Contents

FRM Part 1: Understanding Difficulty Level

Part 1 of the FRM exam assesses candidates’ knowledge of fundamental risk management concepts. It consists of 100 multiple-choice questions to be completed within 4 hours, making time management a critical skill for the exam. The paper measures the theoretical knowledge and the practical application of the concepts and formulas.

Key Focus Areas

Foundations of Risk Management: Looks at the principles of risk, risk management frameworks, and corporate governance.
Financial Markets and Products: Test derivatives, equities, fixed incomes and fundamental trading strategies.
Quantitative Analysis: Concentrates primarily on profitability, regression, statistics and quantitative tools necessary for risk modelling.
Valuation and Risk Models: Focuses on valuation techniques, exposure measurement and risk measurements.

Difficulty Level: Financial Risk Management Exam Part 1

Part 1 of this exam is on the mathematical and statistical concepts and requires a candidate to know how to apply formulas in an exam situational environment (under time pressure). Moreover, it requires critical thinking skills to assess data and make logical connections instead of memorizing material. Many candidates struggle with quantitative techniques and formulas in this exam format because they must apply speed and precision to solve problems rationally.

What to Expect?

Expect a couple of calculation questions that assess your knowledge of the practical application.
Be prepared for time pressure because of the sheer volume of questions.
Success is based on your understanding of concepts, rather than remembering the formulas. It is far more valuable to know the ‘why’ behind the formulas than simply to memorize the formulas.

FRM Part 2: Understanding Difficulty Level

The Financial Risk Management exam part 2 includes 80 MCQs, which need to be solved within 4 hours. Unlike part 1, which prioritizes formulas or core concepts, part 2 is application-based, examines your ability to interpret, evaluate and apply risk management frameworks in real-world situations.

Key Focus Areas

Market Risk, Credit Risk and Operational Risk: This portion examines advanced risk types and asks examinees to identify the models, frameworks and real-life applications of risk measurement and control.
Risk Management and Investment Management: This focuses on the theory and practice of managing portfolios and investments under various risk settings, ensuring that students consider how theoretical concepts apply in practice.
Current Issues in Financial Markets: This section focuses on recent events, the global state of financial risks, and regulatory efforts to update their tools in response to the evolving risk landscape. Candidates are tested to see if they can apply their risk knowledge to current market and risk situations.

Difficulty Level: Part 2 of FRM Exam

Greater Qualitative and Applied Aspects Than Part 1: Part 2 of the FRM exam is less formulaic than Part 1 and instead presents more interpretive and qualitative problems. While calculation remains, focus here is on applying knowledge to business and financial decision-making.
Risk Management and Investment Management: The overall focus remains on managing portfolios and investments across various risk settings, enabling students to integrate theory with practice.
Case Study-Based, Analytical Questions Dominate: Expect long, case-based questions that test the analytical skills of candidates. This case will replicate real corporate or financial events, where one needs to identify the risks, assess the likelihood and effect, and suggest actionable alternatives.

What to Expect?

Situational Problems Are More Complex Than Straightforward Calculations: This means that candidates will encounter fewer questions in straightforward formula format and more in the form of multifaceted problems that demand situational judgement.
Keep up with Common Industry Practices and Regulatory Topics: Since Part 2 covers current financial market practices and regulations, candidates are expected to stay up-to-date with evolving market practices.
Examines Decision Making and Judgement More Than Formulas: Ultimately, the exam assesses your ability to think like a risk manager and tests your technical knowledge and decision-making skills under uncertain conditions.

Conclusion

The FRM exam is challenging, and it will be difficult for you. Part 1 assesses your understanding of fundamental concepts and quantitative skills, while Part 2 focuses on applying those concepts and knowledge in real-life risk management situations.

However, passing both parts requires more than just hard work; it involves developing analytical skills, consistently applying those abilities, and a thorough understanding of the practice. When adequately prepared, candidates can effectively address the challenges and obtain a reputable certification that is recognised internationally. To learn more about the Financial Risk Management exam, contact the Zell Education team today!