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What is the Energy Risk Professional program (ERP)?

The American Petroleum Institute (API) and the Global Association of Risk Professionals (GARP) have joined forces to provide a new certification program especially for energy risk professionals. The ERP certification program is designed to measure an energy risk professional’s prowess to manage risk across diverse energy areas as well as financial marketplaces. The program was created with input from leading energy risk experts and practitioners from all around the world, and it includes downstream and upstream processes as well as energy commodities.

The Energy Risk Professional (ERP) program measures a candidate's knowledge of the major energy markets and tests their ability to manage the physical and financial risks that occur in the complex universe of energy. The program curriculum provides a complete overview of all major energy markets including the upstream and downstream processes associated with each, trading and structuring of diverse energy commodities, and the identification, measurement and management of physical and financial risks related to energy.

Why should I consider becoming an Energy Risk Professional?

As global economies rebound and the world population grows global energy requirements will expand, creating demand for highly trained ERPs. Earning your designation not only broadens your skill set, it demonstrates a standardized level of industry knowledge, making you a recognized leader in energy risk management.

What makes the ERP program unique?

With increasing globalization and interdependence of energy products and risk management techniques, the main goal of the ERP is to help ensure everyone in the energy industry "speaks the same language."

Based on current industry standards and practices, the ERP program creates a unique link between the physical and financial energy markets. Topics related to the major physical markets include exploration and production, transportation and storage, refining and processing, distribution, and the trading, structuring and hedging of physical commodity positions.

The program expands upon the physical markets to provide candidates an understanding of sophisticated financial trading instruments, complex structured energy transactions and the techniques used by producers and consumers to measure and manage energy risk. Moreover, candidates will gain fundamental knowledge of the many regulations that apply to the management and supervision of financial risk in the energy industry.

Who designs the ERP Exam?

The ERP program was developed by GARP with the support of the API. GARP is a not-for-profit independent association of close to 100,000 risk management practitioners and researchers representing banks, investment management firms, government agencies, academic institutions, and corporations from more than 167 countries worldwide. It also administers the Financial Risk Manager (FRM), the certification recognized by financial risk professionals worldwide.

GARP's Energy Oversight Committee (EOC) plays a vital role in preparing the ERP Exam. For that reason GARP ensures that the committee is composed of individuals with expertise spanning the full spectrum of disciplines covered by the ERP Exam. Current EOC members include an equal weighting of senior practitioners with expertise in risk consulting, commodity trading, risk management and quantitative analysis from both the physical and financial markets.

In order to ensure that exam topics and questions are current and relevant, the EOC updates the ERP Study Guide annually and finalizes questions approximately two months prior to the exam. Before it is finalized the examination is reviewed by a select group of energy market experts from around the world to ensure that questions are clear to candidates regardless of where in the world they may be sitting for the exam.

What does the ERP Exam cover?

Physical energy markets covered in the ERP program include: Exploration, production and risk management techniques for crude oil, refined petroleum products, natural gas, liquefied natural gas (LNG), coal, electricity, and alternative energies. Successful candidates will also attain a broad understanding of the sophisticated financial instruments and risk management approaches used by producers and consumers to price and hedge energy products. Candidates will attain a fundamental knowledge of the many regulations applying to the management and supervision of financial risk in the energy industry.

The exam weights and question allocation for the ERP Exam are roughly:

Physical Energy Markets - Total weight 40%

• Petroleum - 15%
• Gas - 10%
• Electricity Production and Distribution - 10%
• Renewables and Carbon Emissions - 5%

Financial Markets - Total weight - 50%

• Financial Products and Valuation - 20%
• Modeling and Valuing Energy Transactions - 15%
• Risk Management Techniques - 15%

Current Issues in Energy - Total weight - 10%

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Hello, my name is Alex Janis and I am an Energy Risk Professional with many years experience in finance and trading.

I took the ERP exam in 2010 and share with you my experiences and insights preparing for the exam. I hope this info will help you study for the test in an effective way, and I wish you all the best for your preparations!

I'm happy to answer your questions about the ERP exam - Just email me!

For general question, please check my blog first.

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