What is the Energy Risk Professional (ERP®)?
Energy Risk Professional (ERP®) is a global certification program for individuals working in the energy risk area. The ERP® program is provided by the Global Association of Risk Professionals (GARP), a leading industry association that provides education and research for the professionals. Candidates with ERP® designations are prepared with knowledge in managing risks for energy commodities and will be more competitive in the job market.
- Energy Risk Professional (ERP®) is a global certification for individuals working in the energy risk area and is provided by the Global Association of Risk Professionals (GARP).
- Candidates must pass the ERP® Part I and Part II exams and demonstrate two years of relevant working experience to gain the ERP® designation.
- The ERP® exams cover the topics of physical energy markets, financial markets, and current issues in energy.
- Certified ERPs need to maintain their GARP membership and earn at least 40 credits for each CPD cycle to maintain the ERP® designation.
Introduction to Energy Risk Professional (ERP®)
The ERP® designation demonstrates an individual’s knowledge and experience in managing risks in energy industries, such as natural gas, coal, oil, and renewable energy. Everyone, even without a risk or energy background, can register for the ERP® program. In order to be certified, a candidate must pass both the ERP® Part I and Part II exams and demonstrate two years of working experience in relevant areas.
To retain the designation, certified ERPs need to maintain their GARP membership and participate in the Continuing Professional Development (CPD) program, which is a mandatory program that delivers industry trends and updates. The CPD program provides risk managers with learning opportunities and advances their careers. The program is based on 2-year cycles.
Certified ERPs needs to earn at least 40 credits for every CPD cycle to maintain their designations. They can earn credits by participating in CPD activities. The activities cover various areas of study, such as quantitative analysis, sustainability, fintech, as well as regulation and compliance.
The ERP® program supports candidates in developing their careers by improving the skills that can be applied in a variety of functional roles. Examples include risk management in energy companies or investment management institutions, trading of energy commodities, consulting, and regulatory compliance. Hiring managers in the energy industry or financial institutes can make the ERP® certification a requirement or preference in the hiring process.
To learn more about renewable energy projects, check out CFI’s Solar Energy Financial Modeling Course.
The ERP® curriculum covers three sections – Physical Energy Markets, Financial Markets, and Current Issues in Energy. The Physical Energy Markets section discusses the gas and petroleum markets, electricity production, and carbon emission. The Financial Markets section weights 50% of the entire curriculum, covering the valuation, modeling, and risk management techniques of energy-related financial products.
A candidate pursuing the ERP® designation must pass the ERP® exam. The exam testifies a candidate’s knowledge of the energy and financial markets, as well as the physical and financial risks.
- The ERP® exam takes place every May and November.
- Candidates can either take the exams separately or on the same day. For example, they can take Part 1 in May and take Part 2 in November (or vice versa), or they can take both parts on the same day in either May or November. If a candidate takes both parts on the same day, their Part 2 exam will only be graded if they passed Part 1.
- Candidates must pass Part 1 before they can take Part 2.
- The exam is administered over a four-hour period for each part.
- Candidates will receive their exam results six weeks after the exam dates.
Part I ERP® Exam
GARP offers the Part I ERP® exam in the morning. The exam focuses on the operation of energy commodity markets, such as crude oil, natural gas, refined products, and renewable resources. The operation process includes generation, transportation, storage, and distribution. Part 1 of the exam contains 80 questions and must be completed in four hours or less.
According to GARP, 42% of the candidates who took the Part I exam in May 2019 passed the exam, and 56% of the candidates passed the Part I exam in November 2019.
Part II ERP® Exam
The Part II exam is offered in the afternoon. Based on the knowledge from the Part I exam, Part II extends to the topics of energy derivatives, valuation modeling, as well as operational, credit, and market risks. Part 2 of the exam contains 60 questions and must be completed in four hours or less.
According to GARP, the passing rate of the Part II exam was 62% for May 2019 and 71% for November 2019.
CFI is the official provider of the global Certified Banking & Credit Analyst (CBCA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful: