DEVELOPING A AND MONITORING OF THE RISK RESPONSE STRATEGIES IN PROJECT FINANCE

Authors

  • Constantinescu Dumitru University of Craiova, Faculty of Economics and Business Administration
  • George Dorin Petcu University of Craiova, Faculty of Economics and Business Administration

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.
JEL classification: G17, G24, G32

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Published

2014-08-28

Issue

Section

Working Group 4: Management, agriculture mechanization and cadastre