A variety of techniques can be used to mitigate sponsor risk. The techniques may vary from project to project and may include:
• ongoing tests of probity
• ongoing tests of capability
• ongoing financial requirements such as providing a topped-up letter of credit or performance bonds to meet claims or to underpin operational performance obligations.
In addition, the project agreement will normally provide for step-in rights in the event of the special purpose vehicle or sponsor being unable to fulfil their contractual obligations.