Sponsor risk is the risk:
(a) where, in the event that the sponsors are unable to fulfil their contractual obligations to government, government will be unable to enforce those obligations against the sponsors or recover some form of compensation or remedy from the sponsors for any loss sustained
(b) that the sponsors are inappropriate or unsuitable to be involved in the delivery of a project, and so may harm the project or bring it into disrepute.
Financial risk refers to the following risks:
(a) the risk that the financiers (debt and equity) will not provide or continue to provide funding to the project (risk of financial uncertainty, see section 6.3)
(b) the risk that financial parameters will change prior to the private party fully committing to the project, potentially adversely affecting price (financial parameter risk, see section 6.4)
(c) the risk that the financial structure is not sufficiently robust to provide fair returns to debt and equity over the life of the project (and hence calls into question the continuing viability of the project) (risk of robustness of financial structure, see section 6.5).