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Developing A And Monitoring Of The Risk Response Strategies In Project Finance

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Listed:
  • Prof. univ. Constantinescu Dumitru Ph. D

    (University of Craiova Faculty of Economics Craiova, Romania)

  • George Dorin Petcu Ph. D Student

    (University of Craiova Faculty of Economics and Business Administration Craiova, Romania)

Abstract

Project finance represents the most common way to finance large investments, especially but not limited infrastructure and energy. The last couple of years shows that the banks did not used the proper tools project valuation, especially form the risk perspective. The most common way of analysis was limited to cash flow and collateral assessment. Considering that a typical project takes a couple of years to be developed and the loans are repaid from the cash flow for many years, we believe that the project assessment from should step in a new stage by analyzing the risks that arise not only from project itself, but from developer organization as well and by using proper tools for stress testing. We propose an risk analysis methodology from a global perspective in project finance starting with the analysis of the three pillars that supports any project, bringing in the light the all the elements necessary for a proper assessment of the risk and introducing the tridimensional view of the project risk profile. We will conclude presenting the key triggers for successful project finance.

Suggested Citation

  • Prof. univ. Constantinescu Dumitru Ph. D & George Dorin Petcu Ph. D Student, 2011. "Developing A And Monitoring Of The Risk Response Strategies In Project Finance," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 2(39), pages 156-166, May.
  • Handle: RePEc:aio:aucsse:v:1:y:2011:i:11:p:156-166
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    File URL: http://feaa.ucv.ro/AUCSSE/0039v2-019.pdf
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    More about this item

    Keywords

    critical; stress test; project management; organizational culture; financial risks; project finance modeling; risk assessment;

    JEL classification:

    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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