Risk Category

Description of Risk

Direct Consequence

Commissioning risk

Delay/ failure in achieving all required approvals

Additional costs, cost of providing a temporary alternative solution

Construction risk

The construction of the assets may not be completed on time, within budget or to specification

Additional costs

Demand risk

The risk that actual demand for a service is lower than planned

Reduced revenue

Design risk

The proposed design may be unable to meet the performance and service requirements

Cost of modification, redesign costs

Financial risk

Inappropriate/insufficient financial structuring

Additional funding costs for increased margins, refinancing costs

Force majeure risk

Unanticipated or natural disaster

Additional costs to rectify

Operating risk

Risks associated with the routine operation of the project

Increased operating costs or reduced revenue

Performance risk

Failure to perform to the specified service level

Costs of meeting performance standards

Change in law risk

Change in current regulatory regime

Costs of complying with new regulations/reduction in revenues

Residual value risk

Failure in achieving the expected realisable value at the end of the project

Lower value for assets at end of project term

Technology obsolescence risk

Risk of technology obsolescence

Cost of replacing technology

Social & environmental risk

Adverse effect of the project on social or environmental set up

Cost associated with rehabilitation, restoring the damage caused

Political risk

Change in political will/ commitment towards the project

Stalling of project, its suspension or termination