Risk category | Description | Consequence | Mitigation | Likely preferred allocation | |||
The risk that a specified event entirely outside the control of either party will occur and will result in a delay or default by the private party in the performance of its contractual obligations. | |||||||
Force majeure | The risk that inability to meet contracted service delivery (pre or post completion) is caused by reason of force majeure events. | Loss or damage to the asset, service discontinuity for government (may include inability to deliver core service) and loss of revenue or delay in revenue commencement for private party. | • If insurable, private party must ensure availability of insurance proceeds towards repair of asset and service resumption and government is to be given the benefit of insurance for service disruption costs; • private party given relief from consequences of service discontinuity; • If uninsurable, private party may establish reserve funding; and • government to develop a contingency plan for alternate service delivery. | private party takes the risk of loss or damage to the asset and loss of revenue. Government takes some risk of service discontinuity both as to contracted service and core service subject to insurance availability and will need to arrange alternative service provision the cost of which will be met from redirected service payments and (if insurable) any shortfall made up from insurance proceeds. | |||