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Risk-Taking

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A breakdown of general risk absorption by various parties in a project financing is summarised below:

Risk Category

Absorbed by :

If Risky by :

Supply/Traffic

Operating:

Technical

Cost

Management

Infrastructure

Environmental

Market

Political

Force Majeure

Foreign Exchange

Funding

Participant

Engineering

Completion

Syndication

Legal

Financier

Financier

Financier

Financier

Financier, Consumer

Financier

Financier, Sales Contract

Financier

Financier

Financier, Company

Financier

Financier

Financier

Company

Financier (underwritten)

Bank

Warranty, Alternative

Company

Company

Contract

Consumer

Company

Buy-back

Insurers, Government

Insurers, Company

Hedging

Swaps, Hedging

JVA, Contract

Insurers

Constructor

Company (best efforts)

Insurers

 

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