FRM Level 2 Pass Rate: Is It Harder Than Level 1?

Kateryna Myrko
Oct 12
5 min read

When candidates ask whether FRM® Level 2 (officially FRM Part II) is “harder” than Level 1 (FRM Part I), they’re usually mixing two ideas: statistical difficulty (pass rates) and felt difficulty (how the exam experience changes). The short answer is: Part II feels tougher because it demands integration and judgment, while pass rates often end up similar to—or slightly higher than—Part I because the candidate pool is more prepared. Here’s a practical way to think about the jump and how to position yourself to pass.

What “harder” really means FRM Level 2 Pass Rate , Is It Harder Than Level 1

Part I is about building the risk toolkit—the core mechanics of market, credit, operational, and quantitative methods. You’ll compute, classify, and recall. FRM Level 2 Pass Rate , Is It Harder Than Level 1

Part II asks you to apply that toolkit in realistic, multi-constraint scenarios. Instead of “compute VaR,” you might be asked which risk measure is most appropriate given liquidity horizons, data quality, and policy limits, and then to interpret backtesting outcomes or stress scenarios.

In other words, Part II shifts from “Can you do the math?” to “Can you choose and defend the right method—and explain the implications?” That’s a different kind of difficulty.

Side-by-side: what changes from Part I to Part II

Dimension	FRM Part I (Level 1)	FRM Part II (Level 2)
Primary aim	Build the core toolkit	Synthesize & judge in case contexts
Question style	Direct calculations, concept checks	Vignette-style, multi-step reasoning
Time profile	More questions, faster cadence	Fewer questions, deeper analysis
Skills that score	Clean setups, formula fluency, calculator mastery	Method selection, assumptions, interpretation, governance awareness
Common traps	Unit/sign errors, formula swaps	Picking a valid but not best method for the stated constraints

Note: The program officially calls them Part I and Part II, even though many people say Level 1/Level 2.

Why pass rates don’t tell the whole story

Pass rates are population statistics. They reflect who sits the exam, not your individual probability. Part II often posts results comparable to—or sometimes higher than—Part I for two simple reasons:

Selection effect: Only candidates who’ve already cleared Part I (and built study discipline) reach Part II.
Maturity effect: By Part II, most candidates manage time better, use error logs, and practice with case-format sets instead of single, disjointed questions.

Meanwhile, many candidates feel Part II is tougher because it’s less “plug-and-chug” and more “choose, justify, and interpret” under ambiguity. Both statements can be true at once.

What to expect on exam day

Case-driven reading: Expect short scenarios and exhibits (tables, memos, term sheets) that hide essential clues—tenor mismatches, runoff assumptions, collateral terms, or governance constraints.
Integrative items: Themes frequently cross boundaries: market risk + liquidity horizons; counterparty risk + collateral agreements; portfolio overlays using derivatives; operational resilience in real processes.
Pacing reality: You have more time per question than Part I, but questions often require a read → map → compute/argue → sanity-check loop. Without a method, time disappears.

The capabilities Part II rewards

Method selection over formula recallBe able to articulate why one approach is more appropriate than another (e.g., ES vs. VaR; historical vs. parametric; scaling assumptions; data sufficiency).
Assumption awarenessIdentify conditions that must hold (normality, independence, liquidity horizon). If the case violates those, adjust your choice or your interpretation.
Cross-topic linkingUnderstand how a liquidity constraint changes risk measurement, how collateral haircuts affect exposure profiles, or how factor exposures connect to tracking error and information ratio.
Clean mechanics with contextGet the units and direction right—bps vs %, annual vs daily scaling, recovery vs LGD, carry vs dividends—and be able to explain what your number means for the decision maker.

A preparation blueprint that reflects the “jump”

1) Train with a repeatable case methodUse the same five steps for every set so it becomes automatic:

Frame: Who decides? What’s the objective and constraint (capital, liquidity, policy, regulation)?
Tag: Mark each paragraph/exhibit with the concept (e.g., LCR/NSFR, CVA/EPE, backtesting exceptions, factor exposure).
Select: Choose the simplest valid method that matches the data and constraints.
Compute/Argue: Do the math or make the policy call; state your key assumption.
Sanity-check: Units, sign, order of magnitude; if surprised, re-check inputs.

2) Build domain “triggers”Create short checklists you can scan mentally while reading:

Market risk: VaR vs ES choice, liquidity horizon, backtesting interpretation, stress design, model risk controls.
Credit & counterparty: ( EL = PD \times LGD \times EAD ); migration and concentration; exposure profiles (EE/EPE/PFE); collateral terms; wrong-way risk.
Liquidity/treasury: LCR/NSFR intuition, HQLA tiers, runoff rates, contingency funding, FTP basics.
Operational risk & resiliency: LDA vs scenarios, dependence assumptions, KRIs, third-party/cyber, continuity.
Investment & risk management links: Tracking error, IR ( (IR = \overline{R_A}/TE) ), factor exposures, overlay hedging.

3) Make practice mirror the exam

Prefer timed item sets over one-off questions.
Spend 2–3× set time in review. Classify misses as Concept, Process, or Careless, and write a one-line fix with a personal trigger (“dividends change forward price—adjust carry”).
Redo a cousin problem within 48 hours so the correction sticks.

4) Guard your pacing

90-second rule: If you’re stuck, eliminate, mark, move—return after banking easier points.
Reserve 5–10 minutes to sweep for unit/sign errors and confirm all responses are submitted.

An 8-week template for the November window

Weeks 1–2: Market risk & backtesting (6–8 timed sets).
Weeks 3–4: Credit/CCR (including CVA), migration & concentration (6–8 sets).
Week 5: Liquidity/treasury & FTP (4–6 sets).
Week 6: Operational risk & resiliency (4–6 sets).
Week 7: Full Mock #1 → deep post-mortem → targeted repair sets.
Week 8: Full Mock #2 (early) and #3 (late), light mixed drills, logistics and rest.

Track weekly KPIs: accuracy by domain, average time per question, and top three recurring error themes. Aim to shrink the themes week over week.

Bottom line

Is Part II harder? It feels harder because it’s more integrative and judgment-heavy.
Will pass rates be lower? Not necessarily. Cohort effects and candidate preparedness often keep Part II outcomes comparable to Part I.
How do you win? Practice in case format, use a repeatable method, know your assumptions, and keep your mechanics clean. Do that consistently, and the “difficulty jump” becomes manageable—and even an advantage.

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