Project Finance Risk Management

Risk management for project finance lending is complex due to the customized nature of each project. The long duration, sheer scale of the borrowing, and customary involvement of both public and private ownership complicate its cash flow cascades. For example, power stations with similarities in their underlying technology often have esoteric financial structures. Traditional static cashflow models only test a small number of subjective, possible scenarios and do not provide estimates of risk statistics. Also, merging results from multiple models into a single consistent framework can be unwieldy without a proper system. These factors make project finance lending a highly specialized discipline for the risk manager.

As today’s most advanced project finance risk system, the SFS has been adapted for various types of project finance ventures. At Risk Integrated, we understand that banks often want to use their own risk models as well as those from third parties. The modular structure of the SFS was designed to allow multiple types of cashflow models to be embedded in a single consistent framework to work with our risk engine.

We currently offer risk models for a variety of projects, such as:

  • Oil, gas and mining
  • Power generation
  • Infrastructure
  • PFI

The SFS for project finance is capable of measuring risk based on the following criteria:

  • Technology
  • Operations
  • Management
  • Counterparty Exposure
  • Sovereign
  • Force Majeure
  • Construction
  • Competitive Exposure
  • Legal
  • Financial Strength
  • Institutional