Ga naar de inhoud

Project Risk Advisory Services

Navigating projects successfully in risky landscapes

Lack off, or inappropriate risk management is the key reason behind negative project cash flows. Corporate environment is continuously re-shaped by various risks that have the potential to pose adverse impacts to projects and investments. VRiC’s Project Risk Advisory Services provide unique solutions that maximize the earnings of every project at every phase within their entire lifecycle.  

Project Risk Advisory Services

Complexity, lenders’ requirements, multidimensional expectations and diversified capabilities in risk management are the key drivers of uncertainty in every project. Use of formal risk management and development of win-win approaches are two fundamental success factors within project management and project financing arena. VRiC has developed a unique platform of Project Risk Advisory solutions that can meet the expectations of every stakeholder in all types of projects. This includes a unique web-based project risk management data-base MINERVA. Wecan support during all typical phases of a Project in order to assist any interested stakeholder finding the optimum balance between upstream and downstream risks.  

Project Risk Advisory from  VRiC – The benefits

Our services are based on the “risk based approach” which has proven to be the most reliable in terms of project risk management and financing. Providing risk based solutions requires thorough knowledge of the global market and business risks. This has proven to be the most tangible benefit for every stakeholder who chooses to navigate projects together with our support. 

Other benefits include:

  • International track record  
  • Flexible and available worldwide  
  • Strong experience based on claims management and advocacy  
  • Customized reporting according to international standards, tailored to each Stakeholder’s requirements  
  • Access to global insurance markets via our broking partners in Europe and London  
  • Optimum allocation of project risk capital  
  • Maximization of projects’ bankability and stakeholders’ equity 

Scope of Work Lenders Insurance advisory

  • Reviewing the current insurance policies being in place (“Existing Insurances”).
  • Your opinion on whether the Existing Insurances are in compliance with market standard for operational wind power projects or whether any insurances should be taken out in addition.
  • Support on insurance related provisions in the finance and security documents.
  • Checking the budgeting for insurance related costs in the financial model.

Confidentiality

Any advice provided by VRiC is for the sole benefit of the Lenders, is given solely for the purpose of the Project and may not be relied upon by third parties. 

The Lender agrees that it they not disclose or otherwise allow to be made available, any such advice (directly or indirectly) to any third party without the prior written consent of VRiC with the exception of other Lenders details of whom the Lender has notified to VRiC in writing prior to such disclosure and/or as may be required by law, by order of a competent authority and /or for auditing or regulatory purposes.

Scope of work

Advise the Lenders in respect of the issues to be considered in relation to the insurances and relevant provisions in the key project documents (EPC and equipment supply agreement, O&M, PPA, Land Leases, LTA, other), project information (technical reports, other), Sponsors’ insurance brokers’ underwriting submission

Risk review of the Project; including identification of the major risks, how they can be mitigated by insurance where possible, and the maturity, depth and volatility of the proposed policy coverages. In particular:

  • Natural and political force majeure;
  • Construction risks and commissioning risks
  • Technology and defects risks
  • Extraneous physical damage risks;
  • Delay and business interruption risks
  • Liability and environmental risks
  • Terrorism and eco-protest risks;

Review and evaluate the proposed insurance program for construction

Ensure that the proposed insurance programs for the construction period (i) covers properly all the risks as customary in similar projects, (ii) is in accordance with administrative and legal constraints of the insurance, (iii) respects the Lenders’ interest, and iv) is in adequacy with the key project documents;

Review deductibles, advise on the extent to which they are in accordance with standard market practice for the risk and exposure;

Review insurance premium, sums insured, delay & interruption indemnity periods; advise on their market adequacy;

Identify significant risks that are uninsured, if any and comment on their insurability, e.g. those that are generally insurable, or have limited insurability or are difficult and expensive to insure.

Review the relevant clauses of the Finance Agreements: Review and comment on the relevant sections of the loan documentation in respect of insurance (including assisting in the drafting of the minimum insurance requirements). Co-operation with the legal and technical advisers of the Lenders, the sponsor’s insurance broker, Facility and Security agent, regarding terms referring to assignment, named insured provisions, loss payee clauses, nullity and alteration provisions, as well as non-vitiation/breach of warranty cover requirements; Check compliance of Insurance Conditions Precedent in the Loan Agreement.

Audit cover notes and policy wordings for the construction phase insurances against the requirements of the Finance Documents to report whether or not the scope of the insurances:

  • comply with the minimum insurance requirements
  • include the Lenders’ interest provisions

Advice on the creditworthiness of any proposed insurer in respect of the Project.

Validate the assumptions reported in the financial model for the construction and operational phase (insurances costs estimation)

Issue an Interim Report highlighting the critical issues raised from carrying out the scope of work, to be provided within 15 business days from when the relevant documentation is provided.

Insurance Reports

  • Resolution of any outstanding issues raised in earlier reports, if any.
  • Review the operational insurance programme documentation at the end of the construction phase and at each renewal, to report upon:
  • transfer from construction phase insurances to operation phase insurances (dovetail with no gaps)
  • the Financial Strength Rating of the selected insurance companies at time of renewal of operational insurance programme, if applicable
  • whether or not the scope of the Insurances complies with schedule of minimum insurance requirements for operational phase
  • whether the Lenders’ interest provisions have been incorporated in the insurance programme

Advise the Lenders as soon as reasonably practicable after we become aware, of any adverse change in the availability of the insurance programme which may necessitate an immediate review in whole or in part of the Project Insurances. For sake of clarity, this will include change in Regulation, force majeure, change in the insurance coverage, a material change in the insurance market, a change in the creditworthiness of the insurers, on the occurrence of any event for which the Lender reasonably believe a professional review is required, etc.

Advise and assist with the negotiation of any changing requirements for the Project Insurances.

Report structure:

  • Insurance Program: Summary of the Borrower’s insurance program, highlighting property, liability and business interruption coverage evidenced to date against damages under corresponding loss scenarios.
  • Contracts: Examination of relevant Project contracts and necessary insurance requirements, identifying key and/or problematic terms and conditions.
  • Loan Agreement Insurance Requirements: the LIA provides the recommended language for the lender insurance requirements to be incorporated into the Loan Agreement.
  • Summary Findings: recap of the findings and presentation of recommendations and action items.