2018

ERP
STUDY GUIDE CHANGES
®

ENERGY RISK PROFESSIONAL garp.org/ERP

 2018 Energy Risk Professional (ERP®) Exam Study Guide Changes

Energy Risk Professional (ERP®)

Study Guide Changes

ENERGY RISK PROFESSIONAL (ERP) PROGRAM
The Global Association of Risk Professionals (GARP)
created the ERP Certification Program for energy market
professionals seeking a designation that assesses and
validates their knowledge and skills. Certified ERPs can
apply knowledge about the production, transportation,
and storage of physical energy commodities; structure
and practical application of energy derivatives;
assessment of energy market data and price modeling;
and identification, measurement, and management of
risk in the energy industry.
ERP CURRICULUM AND EXAMINATION
Development of the ERP Exam curriculum is guided by
GARP’s Energy Oversight Committee (EOC), a panel of
senior practitioners and academics with practical energy
market experience and risk management expertise. The
exam topics and required readings listed in the 2018 ERP
Study Guide and 2018 Learning Objectives (LOBs) are
updated annually in conjunction with the EOC to ensure
the ERP Exam remains a timely and accurate assessment
of the knowledge and skills required of energy market
and risk professionals.
Each year, Certified ERPs from a variety of disciplines
and geographies are invited by GARP to participate
in the exam development process. GARP’s dual
collaboration with EOC members and its Certified ERP
alumni helps to ensure that the ERP Exam and exam
curriculum remain consistent with current industry
practice.
2018 ERP EXAM STUDY GUIDE CHANGES
The Study Guide Changes document summarizes all of
the readings deleted from the 2017 curriculum, and all
the new required readings required for 2018. Returning
2017 ERP candidates should review the curriculum
changes before they begin to prepare for the 2018
examinations.

ERP EXAM PART I | 80 QUESTIONS

} Crude Oil and Refined Product Markets
} Natural Gas and Coal Markets
} Electricity Markets and Power Generation

ERP EXAM PART II | 60 QUESTIONS

} Financially-Traded Energy Products
} Risk Assessment and Energy Price Modeling
} Risk Management Tools
• Market Risk Valuation and Management
• Credit and Counterparty Risk Assessment
• Operational Risk and Enterprise Risk Management

© 2018 Global Association of Risk Professionals. garp.org/erp 1

 2018 Energy Risk Professional (ERP®) Exam Study Guide Changes

ERP Exam Part I

For 2018, the Introduction section of the ERP Examination has been eliminated. The eight questions from this section
have been reallocated to the Crude Oil and Electricity sections (four questions per section.)

Readings moved to ERP Part II Examination

1. Global Association of Risk Professionals (GARP). Code of Conduct.*

Deletions
1. Glen Swindle, Valuation and Risk Management in Energy Markets. (New York, NY: Cambridge Press, 2014).
• Chapter 1: Context
2. Michael Crouhy, The Essentials of Risk Management, 2nd Edition. (New York, NY: McGraw-Hill Education, 2014).
• Chapter 1: Risk Management: A Helicopter View
• Appendix 1.1: Typology of Risk Exposures
3. S. Mohamed Dafir and Vishnun N. Gajjala, Fuel Hedging and Risk Management. (Hoboken, NJ: John Wiley &
Sons, 2016).
• Chapter 1: Energy Commodities and Price Formation

*This reading is available for free on the GARP website.

© 2018 Global Association of Risk Professionals. garp.org/erp 2
 2018 Energy Risk Professional (ERP®) Exam Study Guide Changes

Crude Oil Markets and Refined Products

ERP EXAM PART I

PART I EXAM WEIGHT | 40%

Additions:
1. Charlotte Wright, Fundamentals of Oil & Gas Accounting, 6th Edition. (Tulsa, OK: PennWell 2017).
• Chapter 15: Conveyances (pp. 557 - 582 only)
• Chapter 17: Reserve Valuation
• Chapter 18: Accounting for International Petroleum Operations (same content as Chapter 15 from 5th Edition)
2. Incoterms 2010. Australian Customs and Border Protection Service.*

Deletions:
1. A Practical Guide to Incoterms 2010. Livingston International.*
2. Transporting Crude Oil by Rail in Canada. Canadian Association of Petroleum Producers (March 2014).*
3. Deborah Gordon, Understanding Unconventional Oil. The Carnegie Papers (May 2012).*
4. Christophe Barret, Brent Prices: Impact of PRA Methodology on Price Formation. Oxford Energy (March 2012).*

* This reading is available for free on the GARP website.

© 2018 Global Association of Risk Professionals. garp.org/erp 3
 2018 Energy Risk Professional (ERP®) Exam Study Guide Changes

Natural Gas and Coal Markets

ERP EXAM PART I

PART I EXAM WEIGHT | 25%

Additions:
1. Anthony J. Melling, Natural Gas Pricing and its Future: Europe as the Battleground. (Carnegie Endowment, 2010).*
• Chapter 2: The Dynamics Between Oil-Indexed and Spot Prices
2. William Leffler, Natural Gas Liquids: A Non-Technical Guide. (Tulsa, OK: PennWell, 2014).
• Chapter 6: Refineries and the Unnatural Gas Liquids
• Chapter 7: Logistics
• Chapter 8: NGL Markets - Petrochemicals
• Chapter 9: NGL Markets - Fuels
3. Oxford Energy, Gas Storage in Great Britain (January 2013).*
• Chapter 2: The Role of Gas Storage

Deletions:
1. Gas Storage Industry Primer. Niska (April 2010).*
2. Oxford Energy: US NGL Production and Steam Cracker Substitution (September 2014).*
3. Reserve Bank of Australia, Developments in Thermal Coal Markets (June 2015).*
4. International Gas Union, Wholesale Gas Price Formation: A Global View of Price Drivers and Regional Trends
(June 2011). Sections 1 to 5, and 8 to 10 only.*
5. Ministry of Economy, Trade and Industry (METI), Strategy for LNG Market Development: Creating a Flexible LNG
Market and Developing an LNG Trading Hub in Japan (May 2016).*

* This reading is available for free on the GARP website.

© 2018 Global Association of Risk Professionals. garp.org/erp 4
 2018 Energy Risk Professional (ERP®) Exam Study Guide Changes

Electricity Markets and Power Generation

ERP EXAM PART I

PART I EXAM WEIGHT | 35%

Additions:
1. John E. Parsons, Introduction to Electricity Markets, 2017 Energy Risk Professional (ERP) Exam Part I (Hoboken,
NJ: John Wiley & Sons, 2017).†
1. Chapter 1: Industry Overview
• Chapter 2: Load
• Chapter 3: Generation
• Chapter 4: Transmission
• Chapter 5: Economic Optimization
• Chapter 6: Bilateral Trading
• Chapter 7: Centralized Markets
• Chapter 8: Other Electricity Markets
• Chapter 9: Emissions
2. German Federal Ministry for the Environment, Emissions Trading Basic Principles and Experiences in Europe and
Germany (November 2016).
3. World Economic Forum, The Future of Electricity New Technologies Transforming the Grid Edge (March 2017).

Deletions:
1. Darryl R. Biggar and Mohammad Reza Hesamzadeh, The Economics of Electricity Markets. (West Sussex, UK:
John Wiley & Sons, 2014).
• Chapter 2: Introduction to Electric Power Systems
• Chapter 3: Electricity Industry Market Structure and Competition
2. Daniel Kirschen and Goran Strbac, Fundamentals of Power System Economics. (West Sussex, UK: John Wiley &
Sons, 2004).
• Chapter 3: Markets for Electrical Energy
• Chapter 4: Participating in Markets for Electrical Energy (sections 4 to 4.3.1.14 only)
• Chapter 7: Investing in Generation
3. Vincent Kaminski, Energy Markets. (London, UK: Risk Books, 2013).
• Chapter 22: Analytical Tools
• Chapter 23: Electricity Market Transactions
4. ISO New England, Overview of New England’s Wholesale Electricity Markets and Market Oversight (May 2014).*
5. Barry Murray, Power Markets and Economics: Energy Costs, Trading, Emissions. (West Sussex, UK: John Wiley &
Sons, 2009).
• Chapter 11: Ancillary Service Markets
6. Leibniz Information Center for Economics, The Future of the European Power Market. (2015).
7. Tim Buckley and Jai Sharda, India’s Electricity Sector Transformation. Institute for Energy Economics and
Financial Analysis (August 2015) (sections 1-6 only).
8. Andrea Roncoroni, Gianluca Fusai, Mark Cummins, editors, Handbook of Multi-Commodity Markets and
Products: Structuring, Trading and Risk Management. (Hoboken, NJ: John Wiley & Sons, 2015).
• Chapter 5: Emissions Markets and Products

* This reading is available for free on the GARP website.

† All rights reserved. Inquiries concerning reproduction of this section should be made to GARP.
© 2018 Global Association of Risk Professionals. garp.org/erp 5
 2018 Energy Risk Professional (ERP®) Exam Study Guide Changes

Financially-Traded Energy Products

ERP EXAM PART II

PART II EXAM WEIGHT | 30%

Deletions:
1. Gordon Goodman, Swaps: Dodd-Frank Memories. (July 2013).*
2. Gordon Goodman, Dodd-Frank’s Impact on Financial Entities, Financial Activities and Treasury Affiliates.
(October 2013).*

* This reading is available for free on the GARP website.

© 2018 Global Association of Risk Professionals. garp.org/erp 6
 2018 Energy Risk Professional (ERP®) Exam Study Guide Changes

Risk Assessment and Energy Price Modeling

ERP EXAM PART II

PART II EXAM WEIGHT | 20%

Additions:
1. Michael Miller, Mathematics and Statistics for Financial Risk Management. (Hoboken, NJ: John Wiley & Sons,
Inc., 2014).
• Chapter 10: Linear Regression Analysis

Deletions:
2. Vincent Kaminski, Managing Energy Price Risk, 4th Edition (London, UK: Risk Books, 2016).
• Chapter 8: Managing Oil Price Risk: Dealing with the Time-Varying Relationship between the Price of Oil
and Fundamentals

© 2018 Global Association of Risk Professionals. garp.org/erp 7

 2018 Energy Risk Professional (ERP®) Exam Study Guide Changes

Risk Management Tools

ERP EXAM PART II

PART II EXAM WEIGHT | 50%

Additions:
1. Jon Gregory, The xVA Challenge: Counterparty Credit Risk, Funding, Collateral and Capital, 3rd Edition.
(Hoboken, NJ: John Wiley & Sons, 2015).
• Chapter 4: Counterparty Risk (sections 4.1 to 4.3 only)
• Chapter 5: Netting, Close-Out, and Related Aspects
• Chapter 6: Collateral (sections 6.1 to 6.6 only)
• Chapter 7: Credit Exposure and Funding (sections 7.1 to 7.4 only)
• Chapter 10: Quantifying Credit Exposure (sections 10.1 to 10.4.5 only)
• Chapter 12: Default Probabilities, Credit Spreads and Funding Costs (sections 12.1 to 12.2.5 only)
• Chapter 14: Credit Value Adjustment (sections 14.1 to 14.2.8 only)
• Chapter 17: Wrong-Way Risk (sections 17.1 to 17.2.4 only)

NOTE: The above chapters replace various chapters from Jon Gregory, Counterparty Credit Risk and Credit Value
Adjustment: A Continuing Challenge for Global Financial Markets, 2nd Edition.

2. James Lam, Implementing Enterprise Risk Management – From Methods to Applications. (Hoboken, NJ: John
Wiley & Sons, 2017).
• Chapter 7: The ERM Framework
• Chapter 13: Risk Control Self-Assessments
• Chapter 15: Strategic Risk Management
• Chapter 17: Integration of KPIs and KRIs
3. World Energy Council, World Energy Perspectives, The Road to Resilience: Managing Cyber Risks (2016).
4. Global Association of Risk Professionals (GARP), Code of Conduct.*

Deletions:
1. Jon Gregory, Counterparty Credit Risk and Credit Value Adjustment: A Continuing Challenge for Global
Financial Markets, 2nd Edition. (Hoboken, NJ: John Wiley & Sons, 2012).
• Chapter 3: Defining Counterparty Credit Risk
• Chapter 4: Netting, Compression, Resets and Termination Features
• Chapter 5: Collateral
• Chapter 8: Credit Exposure (sections 8.1 to 8.4 only)
• Chapter 10: Default Probability, Credit Spreads and Credit Derivatives (sections 10.1 - 10.2 only)
• Chapter 12: Credit Value Adjustment (section 12.1 only)
2. Operational Risk Management in the Energy Industry. (Management Solutions, 2014).*
3. John Fraser and Betty Simkins, Enterprise Risk Management: Today’s Leading Research and Best Practices for
Tomorrow’s Executives. (Hoboken, NJ: John Wiley & Sons, 2010).
• Chapter 8: Identifying and Communicating Key Risk Indicators

* This reading is available for free on the GARP website.

© 2018 Global Association of Risk Professionals. garp.org/erp 8
Creating a culture of risk awareness ®

garp.org
The Global Association of Risk Professionals (GARP) is the leading
association dedicated to the education and certification of risk
professionals, connecting members in more than 190 countries and
territories. GARP’s mission is to elevate the practice of risk management
at all levels, setting the industry standard through education, training,
media, and events.

© 2018 Global Association of Risk Professionals. All rights reserved. (11.01.17)