The ERP Exam: The Things You Should Know, and The Best Way to Prepare.

Posted on June 13, 2011

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The Energy Risk Professional (ERP) is the latest professional designation from GARP aimed towards risk professionals working in the physical and financial fields of energy. Coming from a finance background, it had been intuitive for me to work with energy financial instruments for risk management and hedging, but the physical aspects of the Energy Risk Professional designation were definitely not clear to me. Still, I registered for the November exam in the summer months of 2010.

Was I surprised when I saw the curriculum: The original ERP study material contained about two thousand pages, some of them lenghty academic writings. Organizing this material, summarizing it, reviewing it in addition to practicing for the exam were made even more complicated by the sheer lack of third party Energy Risk Professional preparation and study material. The only study material in pdf format available currently are the ViveraRISK Concept Checkers for the ERP exam. The is a separate post about them above.

The ERP course includes physical aspects of petroleum (hydrocarbon genesis, refining, move with tankers, pipelines) along with coal and gas, as well as alternative energy like solar, hydro, wind, and biomass. A smaller segment of nuclear energy, financial trading instruments, valuation of energy transactions, financial disclosure, and laws and regulations rounds out the syllabus. Dragana Pilipovic’s book “Energy Risk: Valuing and Managing Energy Derivatives” (2nd Edition  (New York: McGraw Hill, 2007),  which is a large section of the curriculum, is an amazing primer on energy risk.

The main task was going over the learning objectives and finding out what exactly was relevant for the exam. I made lots of summaries of the original articles, but to transfer these into my head for the exam was another question. I utilized a spaced repetition program with my summaries, and that had been quite useful (but is not very time sensitive).

I encourage you to take the Energy Risk Professional (ERP) exam from GARP. That designation is still  new, but I do believe it will probably grow in importance in the next two to three years, and provides the potential to help you in your career.

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