FRM vs ERP

Difference Between FRM and ERP

FRM is the short form for Financial Risk Manager and with this course, an individual can earn job opportunities in the field of investment banking, risk assessment management, etc whereas ERP is the short form for Energy Risk Professional and with this course, an individual can earn job opportunities in global energy companies, etc.

In an increasingly complex financial world, there has been a growing demand for risk professionals with the capabilities to identify, evaluate, and financial risksFinancial RisksFinancial risk refers to the risk of losing funds and assets with the possibility of not being able to pay off the debt taken from creditors, banks and financial institutions. A firm may face this due to incompetent business decisions and practices, eventually leading to bankruptcy.read more. It is important to note that other key areas like technology and energy have also felt an urgent need for qualified risk professionals who can identify potential risks, including financial, and make it possible to minimize or manage the risks by adopting a strategic approach. In the course of this article, we are going to discuss two key risk management credentials, FRM and ERP, dealing with financial and energy risk management, respectively. This should be of help for anyone planning to pursue a career in risk management in either of these areas.

FRM-vs-ERP

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The article will give you information as per below –

  1. FRM vs. ERP Infographics
  2. What is FRM?
  3. What is ERP?
  4. FRM vs. ERP Exam Requirements
  5. Why pursue FRM?
  6. Why pursue ERP?

FRM vs. ERP Infographics


Reading time: 90 seconds

Let’s understand the difference between these two streams with the help of this FRM vs. ERP Infographics.

FRM-vs-ERP-infographics

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FRM vs. ERP Summary

SectionFRM ERP
Organizing BodyThe FRM exams are managed by the Global Association of Risk Professionals (GARP), USA. The ERP exams are managed by the GARP, USA. However, GARP has decided to discontinue the ERP program after the exams of 2021.
PatternThe course is divided into 2 parts – FRM Part I and FRM Part II. The course is divided into 2 parts – ERP Part I and ERP Part II.
Duration of CourseThe candidates need to clear the Part II exam within 4 years of passing the Part I exam. Given that the course will be discontinued, candidates who had cleared the Part I exam must pass the Part II exam by November 2021. After passing the Part II exam they will have 5 years to submit their work experience to complete the ERP certification process.
SyllabusThe course primarily covers the study of the following topics

 

  • Quantitative Analysis
  • Risk Models
  • Financial Markets & Products
  • Valuation
  • Credit Risk
  • Market Risk
  • Operational Risk & Resiliency
  • Treasury & Liquidity Risk Management
  • Investment Management
  • Current Issues in Financial Markets
 The course primarily covers the study of the following topics

 

  • Crude Oil Market
  • Refined Product Market
  • Coal Market
  • Natural Gas Market
  • Electricity Market
  • Power Generation
  • Financial Energy Products
  • Energy Price Modeling
  • Risk Assessment Modeling
  • Risk Management Tools

 

Exam FeesThe enrollment fee is $400 and the details of exam fees are as follows

 

  • Part I: $425 for early registration, $550 for standard registration, and $725 for late registration
  • Part II: $350 for early registration, $475 for standard registration, and $650 for late registration
 Currently, the registration of the Part II exam is available and the details of exam fees are as follows

 

  • Part II: $350 for early registration and $475 for standard registration.

 

 

JobsSome of the common profiles include

 

  • Risk Assessment Manager
  • Investment Banker
  • Financial Risk Consultant
  • Risk Management Analyst
 Some of the common profiles include

 

  • Energy Risk Analyst
  • Energy Risk Manager
  • Energy Consultant

 

DifficultyThe exams are very difficult as only ~30% of the candidates who start the course end up clearing both parts. The pass rates for the exams conducted for Part I and Part II during 2019 were 45.9% and 58.6% respectively. [Source: GARP] The exams are quite difficult as only ~40% of the candidates who start the course end up clearing both parts. During November 2019, the pass rate for Part I and Part II were 56.3% and 70.7% respectively. [Source: GARP]
Exam DateThe schedule of the upcoming exams for the year 2021

 

  • Part I: May 08-21, July 10-23, and November 13-26
  • Part II: May 15 (paper-based) and December 04-10 (computer-based)
 The schedule of the upcoming exams for the year 2021

 

  • Part II: May 15 and November 20

 

What is FRM?


Financial Risk Manager (FRM) is a globally acknowledged credential offered by the Global Association of Risk Professionals (GARP), an international organization engaged in promoting industry standards in the field of risk management. FRM is focused on financial risk management, which makes it a highly specialized certification program. This makes it suited for individuals planning to gain expertise in financial risk management instead of adopting a generalized approach. An increasing number of global organizations are looking for accredited risk professionals to add that competitive edge to survive in the modern industry.

What is ERP?  


Energy Risk Professional (ERP) is an internationally acclaimed credential, also awarded by GARP. This is perhaps the only credential of its kind, developed for those with a keen interest in energy risk management as a highly specialized field that can offer some good career prospects in the global industry. This credentials focus on managing physical and financial risks involved in energy management and helps acquire an in-depth understanding of global energy markets. Participants are introduced to the structuring and trading of energy commodities and concepts of identification, evaluation, and management of complex energy risks.

FRM vs. ERP Exam Requirements


FRM:

There are no educational requirements, but the candidate should have at least 2 years of full-time work experience related to risk management, including portfolio management, risk consulting, risk technology, or other related areas.

ERP:

There are no prerequisites to register for the exam. However, candidates have to demonstrate 2 years of relevant work experience to earn the designation. ERPs are required to maintain an active membership of GARP and earn 40 hours of Continuing Professional Development (CPD) every 2 years to keep up with the prevailing industry standards.

Why pursue FRM?


FRM should be pursued by risk professionals with a reasonable amount of industry exposure to acquire advanced risk management knowledge and skills imparted as a part of the certification program. Those willing to specialize in financial risk management can benefit a great deal from this credential. It helps a professional become a part of an elite global network of financial risk professionals. This can be of immense advantage for professionals planning to become associated with organizations of global repute.

Read more about FRM Exam Dates.

Why pursue ERP?  


ERP is meant for risk professionals focused on acquiring expert knowledge and capabilities in energy risk management instead of risk management as more of a generalized field. It must be understood here that risk management in any form is a very complex field, and one should only go along with such a career choice if they are sure about it. Energy risk management might be considered more of a developing field but quite an important one, keeping in mind the central role of energy as a commodity in the modern world. After earning this designation, professionals can look for work opportunities with global energy organizations.

Conclusion


FRM is primarily meant for professionals with industry exposure in financial risk management and looking to specialize in the field with a comparatively wider scope to explore opportunities related to the management of market and non-market financial risks in the global industry. On the other hand, ERP is aimed at helping specialize in energy risk management, which is a unique field in and of itself considering the emerging significance of energy commodities, development of energy markets, and the need for skilled professionals to manage inherent physical and financial risks in the highly complex energy industry. FRM is more suited for those who have already worked in this domain and would like to gain further expertise in the field. In contrast, ERP is meant for those with relevant experience in energy risk management, making it a somewhat difficult designation to earn, but with its unique advantages in the emerging global scenario.

Reader Interactions

Comments

  1. Steven Fernandes says

    Thanks for posting this blog. I found it very useful. Can you tell me how much Is the average salary range of FRM in India?

    • Dheeraj Vaidya says

      Thanks. Well Average salaries for Financial Risk Manager Stands anywhere between INR 776,000 and INR 1,236,504 in India. You can refer to this article FRM salary for further detail

  2. Jalen Feriz says

    Actually I went through some of the other resources and this is one of the best resource that I have seen today. You bring such useful knowledge which is easy to understand and especially I must say about this FRM blog. You have explained each point with brief explanation. Thanks and keep posting!! Can you tell me what the career prospects are after Certified FRM?

    • Dheeraj Vaidya says

      thanks for your kind words. Well you have to know that the demand for financial risk managers has always being strong. But at the same time your career prospects may vary according to your professional experience. The career prospects after Certified FRM are you can get employed at banking institutions, consulting firms, government regulating agencies, financial services institutions and there are many others.

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