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2017
Study Guide
ENERGY RISK PROFESSIONAL (ERP) PROGRAM
The Global Association of Risk Professionals (GARP) created the ERP Program to meet the growing
demand for professionals who understand the complexity of physical and financial energy markets
and their related risks. Certified ERPs are able to apply knowledge on a range of topics that includes:
production, transportation and storage of physical energy commodities; mechanics of financially-
traded energy products and their practical application; data assessment and modeling of energy
prices; and tools for assessing and managing risk in the energy sector.
ERP EXAMINATION
Development of the ERP Exam and its underlying curriculum is guided by the GARP Energy Oversight
Committee (EOC), a panel of senior practitioners and academics with practical market experience.
Readings and topics covered in the ERP Study Guide and Learning Objectives are updated annually
in conjunction with the EOC to ensure the Exam remains a timely and accurate assessment of the
knowledge and skills required of an energy risk practitioner. Completion of the self-study curriculum
culminates with candidates sitting for the ERP Exam, a two-part, multiple choice exam that objectively
benchmarks a candidates knowledge of important concepts within the following topics:
To further align with industry needs, the ERP Exam is created in close consultation and collaboration
with practicing ERPs active across a variety of disciplines and geographies. Exam questions combine
theory and real-world work experience drawn from market insights shared by EOC members and
practicing ERPs.
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2017 Energy Risk Professional (ERP) Exam Study Guide
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COMMONLY USED ABBREVIATIONS AND ACRONYMS
The following is a list of commonly used abbreviations and acronyms that may appear on the exam:
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2017 Energy Risk Professional (ERP) Exam Study Guide
2. 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
3. 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
2. *An Introduction to Petroleum Refining and the Production of Ultra Low Sulfur Gasoline and Diesel
Fuel. The International Council on Clean Transportation. MathPro (Oct 2011).
3. Charlotte Wright & Rebecca Gallun. Fundamentals of Oil & Gas Accounting, 5th Edition. (Tulsa, OK:
PennWell Books, 2008).
Chapter 15. Accounting for International Petroleum Operations
6. *Transporting Crude Oil by Rail in Canada. (Canadian Association of Petroleum Producers, March 2014).
7. *How Pipelines Make the Oil Market Work Their Networks, Operation, and Regulation. (Allegro
Energy Group, December 2001).
8. *Deborah Gordon. Understanding Unconventional Oil. The Carnegie Papers (The Carnegie Endowment
for Peace, May 2012).
9. *Oil and Gas Exploration and Production Lending. (Office of the Comptroller of the Currency,
March 2016).
10. *Christophe Barret. Brent Prices: Impact of PRA Methodology on Price Formation. (Oxford Energy,
March 2012).
Coal Markets
Physical properties of coal
Types of coal, units of measure, and heat content
Benchmarks, contract specifications and trading
Global coal markets and economic fundamentals
Transportation
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.
6. *Oxford Energy: US NGL Production and Steam Cracker Substitution (Sept 2014).
8. *Jonathan Stern and Howard Rogers. The Dynamics of a Liberalised European Gas Market Key
Determinants of Hub Prices, and Roles and Risks of Major Players. (Oxford Energy, December 2014)
Sections 1.1 to 1.4 only.
9. *Ministry of Economy, Trade and Industry. Strategy for LNG Market Development: Creating a Flexible
LNG Market and Developing an LNG Trading Hub in Japan (May 2016).
10. Michael D. Tusiani and Gordon Shearer. LNG: Fuel for a Changing World - A Nontechnical Guide -
2nd Edition (Tulsa, OK: PennWell Books, 2016).
Chapter 12. LNG Project Formation
Chapter 13. Upstream Gas Supply Agreements
Chapter 14. LNG Sale and Purchase Agreements
Chapter 15. LNG Tanker Contracts
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
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4. *ISO New England. Overview of New Englands Wholesale Electricity Markets and Market Oversight
(May 2014).
ERP EXAM PART I
5. Barry Murray. Power Markets and Economics: Energy Costs, Trading, Emissions. (West Sussex, UK: John
Wiley & Sons, 2009).
Chapter 11. Ancillary Service Markets
6. Rafal Weron. Modeling and Forecasting Electricity Loads and Prices. (Hoboken, NJ: John Wiley & Sons,
2006).
Chapter 1. Complex Electricity Markets
7. *Kenneth Skinner. Heat Rates, Spark Spreads and the Economics of Tolling Agreements (Dec 2010).
9. Rebecca Busby. Wind Power: The Industry Grows Up. (Tulsa, OK: PennWell Books, 2012).
Chapter 6. Wind Farms: Developing and Operating Wind Power Plants
10. *International Renewable Energy Agency (IRENA). Renewable Energy Integration in Power Grids
(April 2015).
11. *Leibniz Information Center for Economics. The Future of the European Power Market (2015).
12. *KU Leuven Energy Institute. The Current Electricity Market Design in Europe (2015).
13. *KU Leuven Energy Institute. Cross-Border Electricity Trading: Towards Flow-Based Market
Coupling (2015).
15. *KU Leuven Energy Institute. Negative Electricity Market Prices (2014).
16. *KU Leuven Energy Institute. Storage Technologies for the Power System (2014).
17. *Tim Buckley and Jai Sharda. Indias Electricity Sector Transformation. (Institute for Energy Economics
and Financial Analysis, Aug 2015). Sections 1 to 6 only.
18. Andrea Roncoroni, Gianluca Fusai, Mark Cummins, eds. Handbook of Multi-Commodity Markets and
Products: Structuring, Trading and Risk Management. (Hoboken, NJ: John Wiley & Sons, 2015).
Chapter 5. Emissions Markets and Products
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Financial Energy Products
ERP EXAM PART II
2. Robert McDonald. Derivatives Markets, 3rd Edition. (Upper Saddle River, NJ: Pearson Education, Inc., 2013).
Chapter 4. Introduction to Risk Management
Chapter 6. Commodity Forwards and Futures (Sections 6.1 to 6.3, and 6.6 to 6.8 only).
5. Betty J. Simkins and Russell E. Simkins, eds. Energy Finance and Economics: Analysis and Valuation,
Risk Management, and the Future of Energy. (Hoboken, NJ: John Wiley & Sons 2013).
Chapter 11. Real Options and Applications in the Energy Industry
6. S. Mohamed Dafir and Vishnun N. Gajjala. Fuel Hedging and Risk Management. (Hoboken, NJ: John
Wiley & Sons, 2016).
Chapter 2. Major Energy Consumers and the Rationale for Fuel Hedging
Chapter 4. Shipping and Airlines Basics for Fuel Hedging
8. *Gordon Goodman. Dodd-Franks Impact on Financial Entities, Financial Activities and Treasury
Affiliates (Oct 2013).
2. Les Clewlow and Chris Strickland. Energy Derivatives: Pricing and Risk Management. (Sydney, AUS:
Lacima Publications, 2000).
Chapter 2. Understanding and Analyzing Spot Prices
Chapter 3. Volatility Estimation in Energy Markets (Sections 3.1 and 3.2 only)
3. Rafal Weron. Modeling and Forecasting Electricity Loads and Prices. (2006).
Chapter 2. Stylized Facts of Electricity Loads and Prices (Sections 2.1 to 2.4 and 2.7 only)
Chapter 3. Modeling and Forecasting Electricity Loads
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Risk Management Tools
ERP EXAM PART II
Operational Risk
Principles for sound operational risk management
Evaluation and management of operational risk
Key Risk Indicators (KRIs)
Key Performance Indicators (KPIs)
Liquidity/funding risk
Liquidity stress testing
Contingency funding
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2017 Energy Risk Professional (ERP) Exam Study Guide
2. John C. Hull. Risk Management and Financial Institutions, 4th Edition. (Hoboken, NJ: John Wiley &
Sons, 2015).
Chapter 8. How Traders Manage Risk
Chapter 10. Volatility
Chapter 12. Value-at-Risk and Expected Shortfall
Chapter 24. Liquidity Risk
3. Les Clewlow and Chris Strickland. Energy Derivatives: Pricing and Risk Management (2000).
Chapter 10. Value-at-Risk
4. Kevin Dowd. Measuring Market Risk, Second Edition. (Hoboken, NJ: John Wiley & Sons, 2005).
Chapter 13. Stress Testing
5. Markus Burger, Bernhard Graeber, and Gero Schindlmayr. Managing Energy Risk: An Integrated View on
Power and Other Energy Markets, 2nd Edition. (Hoboken, NJ: John Wiley & Sons, 2014).
Chapter 3. Risk Management (Section 3.4 Credit Risk only).
6. 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 and 10.2 only)
Chapter 12. Credit Value Adjustment (Section 12.1 only)
7. *Aswath Damodaran: Country Risk Determinants, Measures and Implications 2015 Edition (July 2015)
Pages 1 to 39 only.
9. Shyam Venkat and Stephen Baird. Liquidity Risk Management A Practitioners Perspective. (Hoboken,
NJ: John Wiley & Sons, 2016).
Chapter 3. Liquidity Stress Testing
Chapter 7. Contingency Funding Planning
10. John Fraser and Betty Simkins. Enterprise Risk Management: Todays Leading Research and Best
Practices for Tomorrows Executives. (Hoboken, NJ: John Wiley & Sons, 2010).
Chapter 8. Identifying and Communicating Key Risk Indicators
12. Michel Crouhy, Dan Galai, and Robert Mark. The Essentials of Risk Management, 2nd Edition. (New York,
NY: McGraw-Hill Education, 2014).
Chapter 17. Risk Capital Attribution and Risk-Adjusted Performance Measurement
13. John Fraser, Betty Simkins, and Kristina Narvaez. Implementing Enterprise Risk Management: Case
Studies and Best Practices (Hoboken, NJ: John Wiley & Sons, 2015).
Chapter 4. Value and Risk: Enterprise Risk Management at Statoil
Chapter 20. Implementing Risk Management within Middle Eastern Oil and Gas Companies
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Creating a Culture of Risk Awareness
About GARP | The Global Association of Risk Professionals (GARP) is the leading globally recognized association
dedicated to the education and certification of risk professionals, connecting members in more than 190 countries
and territories. GARPs mission is to elevate the practice of risk management at all levels, setting the industry
standard through education, training, media, and events.