Should You Get The ERP (Energy Risk Professional)?

Should You Get The Energy Risk Professional (ERP)?

Should You Get The Energy Risk Professional (ERP)?This question comes up at least once a week: “Hi Alex, I am a [research economist/trader/risk manager/…] at [energy/power company] and wonder if the ERP is right for me for a career boost. I am currently also studying for an MBA at […]. What you would advise?”

It’s an important question, one that I also asked myself before I studied for the ERP. Here some pointers that may help you in your decision based on my own experience and discussions with other Energy Risk Professionals.

ERP vs. Bachelor’s

For starters, an important thing to understand is that the ERP is not a degree but a professional qualification. So unless you already possess a degree level education, you could not compare the ERP with a university degree or an MBA. Most corporate jobs nowadays necessitate a bachelor’s (BSc or BA) or a master’s (MSc or MA) degree in some form or another, so if you want to climb up the corporate level fast, you first will need at least a bachelor’s degree. This is also a prerequisite to register for the ERP but can be gotten around by means of at least four years of professional work experience.

If you already have a bachelor’s degree or are studying for one and you are working in the energy sector, I recommend you absolutely go for the ERP next to your work/studies. If you don’t have a bachelor’s but enough work experience, the ERP will still help you in your job, and a big plus is that you can do it next to your work at your own pace. It’s really more a matter of priorities, but in general, anyone working in the energy sector could profit from the Energy Risk Professional designation.

ERP vs. Energy MBA

Many business schools offer an MBA in international energy or something similar. An MBA in general is definitely more involved (and much more expensive) than the ERP, and again, the MBA is a degree, while the ERP is “only” a professional designation. An important distinction is that the ERP is geared towards risk management alone, while the MBA also includes management and an array of organizational skills such as marketing and sales.

The applications for an ERP are different from an MBA: The MBA candidate would want to work in an executive position as a director or CEO, while the ERP is geared towards risk management, and not leadership or team management. So if you know you want to work in risk management specifically, the ERP would be preferred, otherwise the MBA will give you a broader education for future career enhancement. If you can do both, that would be ideal in my opinion, but carefully weigh the cost and the benefits with what you really want to do (risk management vs. general management) first.

ERP vs. FRM/CFA/CAIA

GARP offers also the FRM (Financial Risk Manager), which often goes in line with the CFA (Chartered Financial Analyst) and the CAIA (Chartered Alternative Investment Analyst). CFA or CAIA charterholders often also have an FRM. The Energy Risk Professional is the newest of all these professional designations and the only one that really involves energy. Commodities are also part of the CFA and the CAIA curriculum, but only at the margin, while the ERP covers extensively options and financial instruments used for risk management in the energy and financial sector.

In my opinion, these designations are complimentary. So you should not sacrifice one for the other if you have already enrolled. For example, if you’re currently studying for CFA Level 2 but are interested in the ERP also, don’t give up on the CFA but try to do both! There are not many charterholders yet who have the ERP next to the CFA and/or the CAIA, so this may give you an edge. Just do a search on Linkedin for “CFA ERP”, you will be surprised!

Conclusion

As you can see, I would advise almost anyone working or interested in energy to go for the ERP. Why? Mostly, because while it is still relatively new the designation will definitely grow in acceptance and importance in the years to come. I wrote a separate blog post about Energy Risk Professional job prospects, feel free to check it out.

In a nutshell, getting a secondary or tertiary education is always an asset both for yourself and for your employer. If you’re constantly improving your skills you will be bound to send a positive signal to your employer when the time of promotions comes up, and you will possess important and necessary skills that have the potential to give you a career boost.

Energy Risk Professional Salary

A question I often hear is “How much can I expect to earn as an Energy Risk Professional?” Obviously, this largely depends on one’s education and experience. I went ahead and searched for ERP salaries on an entry level on simplyhired.com and payscale.com. Simplyhired lets you calculate average salaries for jobs posted on their site. An annual salary of $74,000 came out on average for energy risk professionals:

Payscale.com delivers a similar picture, an average of roughly $59,000:

Again, these numbers are calculated for entry level positions with minimal experience. GARP delivers data for more experienced risk managers:

You see, as in any job, compensation is largely dependent on education and experience. In my opinion, having the Energy Risk Professional certification (ERP) under your belt can only help you rise on the pay scale, especially, as the designation will gain popularity over the years. If you consider working in energy, it also makes sense to get an early start in the field, as your experience will accumulate over the years. For more info about this topic, please also read “What can the ERP do for my career”.

If you are currently looking for a job, please also visit the ERP Job Board. In either case, I wish you all the best for your ERP exam preparation!

How Will the ERP Designation Help Me to Advance My Professional Career?

A common question I get in emails is this one: “I already work in the energy industry. What will the ERP (Energy Risk Professional) designation do for me to advance my career?”

This is an obvious question often heard from energy marketers, energy commodity traders, engineers, and energy risk managers. The ERP designation is not widely known yet, but this may change soon. While the ERP (short for “Energy Risk Professional”) is relatively new, it stands on solid footing endorsed by GARP (the Global Association of Risk Professionals) and API (the American Petroleum Institute). There are approximately 500 ERP charterholders so far (as of 2010), and their number is expected to grow very quickly. The pass rate on the ERP exam has been about 35% in 2010, so this is definitely not a designation that you simply buy by enrolling for the exam. The ERP designation can be gained by passing one exam, held in May and November each year, but this may be amended in the future, just as has been the case lately with the FRM designation (short for Financial Risk Manager, also by GARP), which now spans over two exams. The time to gain the ERP designation is still relatively short with manageable effort, for the time being.

Having passed the ERP exam in the first go, I can say that the material is not too difficult. You should, however, take your exam preparation seriously: Start at least six months before the exam with the required reading material, and finish reading and summarizing the material at least two months prior to the exam, so you have ample time to review all the study materials and take practice exams.

I definitely think the ERP designation will add value to your resume if you work in the energy industry. Even if you work in related financial fields, I would advise you to consider taking the exam. The effort is not as huge as for other designations such as the CFA, CAIA, or FRM, but you will still get an endorsement from GARP and API. If you can show to prospective employers that you are willing to improve your skills, this always sends a positive signal that will differentiate you from the herd. Employers rewards achievers, so be prepared for an improvement of your professional situation upon getting any professional designation.

If you have made the decision to enroll for the ERP exam, I applaud you. This is your first step to excellence in the growing field of energy risk management. I wish you all the best for your exam preparation on the way to becoming an Energy Risk Professional!