Step 1 - What are the Systematic Risks in the Project?
The following table of Systematic Risks was based on a review of, among other things, draft contract documents for the project. An assessment of Systematic Risks can also be based on industry studies and other references describing the particular services and their market characteristics. Further detail on the allocation and importance of these risks are contained in the discussion on Step 5:
| Type of Systematic Risk | Description | State | Project Company | Shared |
| Demand risk
| That element of demand risk that is related to the level of general economic activity affecting the demand for the Hospital (but not that element of demand risk related to performance of services by the Project Company). |
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| Inflation | Risk of unexpected inflation (which could be represented by unusually high or low CPI). That is, the risk that the real value of payments made during the term of the arrangements is eroded (or increased) by inflation with a diminution (or increase) in returns. |
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| Residual value | The risk that either on termination of the Project Deed, or during the course of delivery of the contractual arrangements the Hospital does not have the value originally forecast when the arrangements were established and the cost of services were priced. |
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| Downturn in broader market | Risk of downturn caused by factors in the broader market, resulting in a reduction in the quality of the Project Company's service provision, or an increase in the Project Company's costs due to its own financial distress/ insolvency or that of its major contractors/ subcontractors. |
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