Mitigating Commercial Risks in Project Finance
In project finance, risks are allocated to the parties best able to manage them. However, the risk mitigation instruments incorporated in the project's contractual and financial arrangements need not be all-encompassing to provide the securit...
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/1996/02/696764/mitigating-commercial-risks-project-finance http://hdl.handle.net/10986/11635 |
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okr-10986-116352021-06-14T11:04:36Z Mitigating Commercial Risks in Project Finance World Bank RISK MANAGEMENT PROJECT RISKS PROJECT FINANCE EQUITY INVESTMENTS PRIVATE INVESTMENTS INSURANCE COMPENSATION CONTRACTS LINE OF CREDIT COMMERCIAL RISKS BODILY INJURY BONDS CAPITAL COSTS CASH FLOW CASH RESERVE COAL CONSTRUCTION COVERAGE DEBT DEBT SERVICE DIVIDENDS ELECTRICITY EMISSIONS EMISSIONS STANDARDS ENVIRONMENTAL CLEANUP FINANCIAL INSTITUTIONS FIXED COSTS GROSS REVENUES INCOME INSURANCE MARKET PRICES MARKET RISK MITIGATION OPERATING EXPENSES POLLUTION PRIVATE SECTOR PRODUCERS PRODUCTIVITY PROPERTY INSURANCE PROVISIONS RESERVES RISK INSURANCE TAX In project finance, risks are allocated to the parties best able to manage them. However, the risk mitigation instruments incorporated in the project's contractual and financial arrangements need not be all-encompassing to provide the security investors require. Commitments may be limited in scope, amount, and duration. This Note provides a checklist of commercial risk mitigation instruments commonly used in project finance by private lenders and sometimes by equity investors. The checklist is structured around a project's development cycle: the construction phase and the operating phase. During the construction period, three main groups of instruments are used to mitigate risk: contractual arrangements and associated guarantees, contingency funds and lines of credit, and private insurance. The instruments most commonly used to mitigate risk during the operating period are: contractual arrangements, contingency reserves, cash traps, insurance, and risk compensation devices. 2012-08-13T15:35:38Z 2012-08-13T15:35:38Z 1996-02 http://documents.worldbank.org/curated/en/1996/02/696764/mitigating-commercial-risks-project-finance http://hdl.handle.net/10986/11635 English at a glance CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Viewpoint Publications & Research |
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Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
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English |
| topic |
RISK MANAGEMENT PROJECT RISKS PROJECT FINANCE EQUITY INVESTMENTS PRIVATE INVESTMENTS INSURANCE COMPENSATION CONTRACTS LINE OF CREDIT COMMERCIAL RISKS BODILY INJURY BONDS CAPITAL COSTS CASH FLOW CASH RESERVE COAL CONSTRUCTION COVERAGE DEBT DEBT SERVICE DIVIDENDS ELECTRICITY EMISSIONS EMISSIONS STANDARDS ENVIRONMENTAL CLEANUP FINANCIAL INSTITUTIONS FIXED COSTS GROSS REVENUES INCOME INSURANCE MARKET PRICES MARKET RISK MITIGATION OPERATING EXPENSES POLLUTION PRIVATE SECTOR PRODUCERS PRODUCTIVITY PROPERTY INSURANCE PROVISIONS RESERVES RISK INSURANCE TAX |
| spellingShingle |
RISK MANAGEMENT PROJECT RISKS PROJECT FINANCE EQUITY INVESTMENTS PRIVATE INVESTMENTS INSURANCE COMPENSATION CONTRACTS LINE OF CREDIT COMMERCIAL RISKS BODILY INJURY BONDS CAPITAL COSTS CASH FLOW CASH RESERVE COAL CONSTRUCTION COVERAGE DEBT DEBT SERVICE DIVIDENDS ELECTRICITY EMISSIONS EMISSIONS STANDARDS ENVIRONMENTAL CLEANUP FINANCIAL INSTITUTIONS FIXED COSTS GROSS REVENUES INCOME INSURANCE MARKET PRICES MARKET RISK MITIGATION OPERATING EXPENSES POLLUTION PRIVATE SECTOR PRODUCERS PRODUCTIVITY PROPERTY INSURANCE PROVISIONS RESERVES RISK INSURANCE TAX World Bank Mitigating Commercial Risks in Project Finance |
| relation |
at a glance |
| description |
In project finance, risks are allocated
to the parties best able to manage them. However, the risk
mitigation instruments incorporated in the project's
contractual and financial arrangements need not be
all-encompassing to provide the security investors require.
Commitments may be limited in scope, amount, and duration.
This Note provides a checklist of commercial risk mitigation
instruments commonly used in project finance by private
lenders and sometimes by equity investors. The checklist is
structured around a project's development cycle: the
construction phase and the operating phase. During the
construction period, three main groups of instruments are
used to mitigate risk: contractual arrangements and
associated guarantees, contingency funds and lines of
credit, and private insurance. The instruments most
commonly used to mitigate risk during the operating period
are: contractual arrangements, contingency reserves, cash
traps, insurance, and risk compensation devices. |
| format |
Publications & Research :: Viewpoint |
| author |
World Bank |
| author_facet |
World Bank |
| author_sort |
World Bank |
| title |
Mitigating Commercial Risks in Project Finance |
| title_short |
Mitigating Commercial Risks in Project Finance |
| title_full |
Mitigating Commercial Risks in Project Finance |
| title_fullStr |
Mitigating Commercial Risks in Project Finance |
| title_full_unstemmed |
Mitigating Commercial Risks in Project Finance |
| title_sort |
mitigating commercial risks in project finance |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/1996/02/696764/mitigating-commercial-risks-project-finance http://hdl.handle.net/10986/11635 |
| _version_ |
1764417451995430912 |