Growing of Age in Risk Mitigation: Funded and Unfunded Participation

Raghu Dharmapuri Tirumala () and Piyush Tiwari
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Raghu Dharmapuri Tirumala: University of Melbourne

Chapter Chapter 7 in Advances in Infrastructure Finance, 2023, pp 159-185 from Springer

Abstract: Abstract Implementation of infrastructure projects comes with many inherent features, and risk management is key among them. Some of the basic products which provide for the risk mitigation for infrastructure projects are financial guarantees, credit enhancements, and insurance. Protection against natural hazards through insurance has matured and has witnessed innovations such as parametric insurance becoming a mainstream option. A range of funded and unfunded risk protections is offered by the development financial institutions to enable better project structuring and participation by a diverse range of stakeholders in infrastructure financing. The public sector credit enhancements either as minimum payment guarantee and debt guarantee have enabled many private sector projects taking off. There is an increasing collaboration of stakeholders with banks, development financial institutions, and institutional investors coming together to finance large and complex deals, resulting in the increasing use of wrap-up products and credit enhancement instruments across the world. The recent events of political and civil unrest across the world and the onset of COVID-19 pandemic showcased the importance of clearly defining the contractual clauses as a means of risk management.

Keywords: Capital markets; Credit enhancement; Guarantee; Insurance; Multilateral development banks; Risk (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-99-0440-2_7

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DOI: 10.1007/978-981-99-0440-2_7

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