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Thank you for invitation. The risks involved could be of various types of risks like currency devaluation risk, price escalation risk, time and cost over run risks, legal and business environment risks, labor regulation risks, political risks etc. The mitigants are various types of insurance and credit guarantees, contract clauses to cover escalation, contingency reserves etc.
IV. Risks and mitigants involved in project financing
Financing infrastructure projects, especially in developing countries, entails a
formidable set of risks. It is the role of the project finance advisor, the project sponsor
and other participants to structure the financing in such a manner that mitigates these
risks. Lenders and investors always are initially concerned about financing immobile
assets in distant, politically-risky areas of the world. The project finance advisor’s role
is to carve out the risks, assigning them to the party who is best suited to be responsible
for controlling them. The purpose of this section is to provide a checklist of the risks
that a project finance transaction faces rather than a strict taxonomy of these risks.
Thank you for the invitation and agreed to answer with Mr. Mohammed Hussain
