What Is an Energy Risk Professional (ERP)?

Energy Risk Professional (ERP) is a professional designation awarded by the Global Association of Risk Professionals (GARP) to individuals who work in the oil, coal, natural gas, and alternative energy industries. As of 2021, the designation will no longer be offered.

Key Takeaways

  • Energy Risk Professional (ERP) is a professional designation provided by the Global Association of Risk Professionals (GARP).
  • The ERP designation is completed by individuals working in the oil, coal, natural gas, and alternative energy industries.
  • The ERP designation equates to advanced degrees in different nations, such as a master's degree in the United States.
  • The purpose of the ERP exam is to gauge the ability of an applicant to manage the physical and financial risks inherent in the world of energy.
  • GARP announced in 2020 that the designation will no longer be offered and that 2021 will be the last year exams are conducted; only for those who have completed Part I of the two-part exam.

Understanding an Energy Risk Professional (ERP)

People seeking this designation must complete a rigorous self-study program, pass a 180-question, eight-hour exam, have at least two years of qualifying work experience, and agree to the Global Association of Risk Professionals' professional code of conduct.

Successful applicants earn the right to use the Energy Risk Professional (ERP) designation with their names, which can improve job opportunities, professional reputation, and pay. The Energy Risk Professional (ERP) program is developed by seasoned energy professionals to teach applicants about real-world scenarios.

GARP announced in 2020 that 2021 will be the last year the ERP exam will be offered as interest in the ERP designation has decreased, according to a study by the organization. As a result, it will no longer be possible to obtain an Energy Risk Professional (ERP) designation.

Attributes of an Energy Risk Professional (ERP)

The study program to become an Energy Risk Professional (ERP) covers physical energy markets, financial trading instruments, valuation and structuring of energy transactions, risk management in financial trading, financial disclosure, accounting, and compliance.

Individuals with the Energy Risk Professional (ERP) designation may work for banks, academic institutions, consulting firms, asset management firms, and a wide variety of other organizations concerned with energy risk.

The designation equates to a specific degree level. For example, the ERP designation is equivalent to an American master's degree, the Regulated Qualifications Framework Level 7 in the United Kingdom, the Ontario Qualifications Framework Level 12 in Canada, and the Hong Kong Qualifications Framework Level 6 in Hong Kong. Degree equivalents also apply in the European Union, Singapore, Australia, India, the United Arab Emirates, and South Africa.

To maintain the ERP designation, members must participate in the Continuing Professional Development (CRP) program. This program ensures that professionals remain knowledgeable about industry trends, developments, and best practices. Available to members are podcasts, training courses, and articles.

The Energy Risk Professional (ERP) Exam

The Energy Risk Professional (ERP) Exam is taken to earn the ERP designation. It is designed to measure a candidate's knowledge of the major energy markets and gauge their ability to manage the physical and financial risks inherent in the complex world of energy.

The exam provides a comprehensive overview of all major energy markets, including the upstream and downstream processes associated with each, the trading and structuring of diverse energy commodities, and the identification, measurement, and management of key physical and financial risks.

Candidates must successfully pass two multiple-choice exams: ERP Exam Part I and ERP Exam Part II. Part I consists of 80 questions, to be completed within four hours. This exam consists of questions testing the candidate's knowledge of physical energy commodity markets. Part II consists of 60 questions, also to be completed within 4 hours. Part II evaluates the test-takers' knowledge of the application of energy derivatives and risk mitigation.

Additional Exam Details

  • Cost: As the exam is no longer offered, only Part II of the exam will be offered in 2021 for those who have completed Part I. The cost is $475 with an early registration cost of $350.
  • Prerequisites: None
  • Pass Grade: Pass/Fail
  • Work Experience: Two years of relevant work experience after the exam
  • Exam Date(s): May 15, 2021
  • Exam Results: Usually provided within six weeks
  • Official Exam Website: http://www.garp.org/erp/

What the Energy Risk Professional (ERP) Exam Covers

Part I of the exam focuses on the following:

  • Crude oil and refined product markets
  • Natural gas and coal markets
  • Electricity markets and power generation

Part II of the exam focuses on the following:

  • Financial energy products
  • Risk assessment and energy price modeling
  • Risk management tools