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Multidimensional Risk Management A Tool for Building Sustainable Projects? Jan P. Mumenthaler Head, Insurance Services Group International Finance Corporation.

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Presentation on theme: "Multidimensional Risk Management A Tool for Building Sustainable Projects? Jan P. Mumenthaler Head, Insurance Services Group International Finance Corporation."— Presentation transcript:

1 Multidimensional Risk Management A Tool for Building Sustainable Projects? Jan P. Mumenthaler Head, Insurance Services Group International Finance Corporation

2 IBRD International Bank for Reconstruction and Development IDA International Development Association IFC International Finance Corporation MIGA Multilateral Investment and Guarantee Agency To promote institutional, legal and regulatory reform Governments of poorest countries with per capita income of less than $1,025 - Technical assistance - Interest Free Loans - Policy Advice To promote private sector development Private companies in 182 member countries - Equity/Quasi-Equity - Long-term Loans - Risk Management - Advisory Services To reduce political investment risk Foreign investors in member countries - Political Risk Insurance Est. 1945Est. 1960Est. 1956Est. 1988 Role: Clients: Products: To promote institutional, legal and regulatory reform Governments of member countries with per capita income between $1,025 and $6,055. - Technical assistance - Loans - Policy Advice IFC is a Member of the World Bank Group Shared Mission: To Promote Economic Development and Reduce Poverty 2

3 IFC FY10 Highlights Over $90 billion Invested in Emerging Markets since 1956 S&P, MoodysAAA Portfolio$48.8 billion Committed $16.1 billion Syndicated $1.9 billion # of companies1,656 # of countries103 # of companies with equity668 3

4 Our Value Added IFCs Products Industry knowledge Relationship with / understanding of local authorities Expertise in emerging markets Capital Mobilization B loan program Credit enhancement (Partial Credit Guarantee) Pre-IPO stamp of approval Capital Mobilization B loan program Credit enhancement (Partial Credit Guarantee) Pre-IPO stamp of approval Long Term Financing Corporate / Project / Acquisition Foreign / Local currencies Equity / Quasi-equity Carbon Finance Long Term Financing Corporate / Project / Acquisition Foreign / Local currencies Equity / Quasi-equity Carbon Finance Advisory Services 4

5 Selected Power Transactions …… $130,000,000 Loan Financing Uganda Lender June 2007 Bujagali Energy $125,000,000 Loan Project Financing Pakistan Lender March 2007 KESC $450,000,000 Equity and Loan Financing India Shareholder and Lender April 2008 Tata Ultra Mega $262,126,000 Equity and Loan Financing Philippines Shareholder and Lender February 2008 Masinloc Power $62,500,000 Loan Financing Brazil Mandated Lead Arranger February 2006 TermoFortaleza 5

6 … and in Oil & Gas Cairn Energy $171,000,000 Revolving Credit Facility & Equity Investment Equity Investor & Mandated Lead Arranger June 2006 India Bankers Petroleum $40,400,000 Senior Loan & Quasi Equity Lender and Investor 2009 Albania Tullow Oil $115,000,000 Senior Loan Sole Lender May 2009 Ghana Pan American Energy $550,000,000 Syndicated Corporate Loan Mandated Lead Arranger June 2007 Argentina Peru LNG $300,000,000 Syndicated Project Financing Lender June 2007 Peru 6

7 Multidimensional Risk Management CSR Equator Principles Corporate Governance World Bank Synergies Political Risk 7

8 CSR – How to Move Beyond … 8

9 Transforming Responsibility into Opportunity Challenges - Not well integrated in models (financial/operational) - No assessment of financial value - Difficult to communicate value Solution through Tool - Estimates expected net present values - Evidence-based customization+ plug-and-play usability - Framework for prioritizing, structuring, timing and resourcing investments 9

10 Key Sustainability Risks - Delays in planning phase - Delays in construction phase - Disruptions in operational phase - Project cancellation or expropriation - Added cost + litigation 10

11 Tool Objectives Calculate sustainability investment value - Direct value creation - Indirect value protection Strategic framework for decisions Stronger Risk Management framework reduced cost of risk 11

12 Understanding your Risk=making the right choices 12

13 Environmental & Social Risk Management IFCs Approach Sustainability Framework - Sustainability Policy - 8 Performance Standards PS1 Social and Environmental Assessment and Management System PS2 Labor and Working Conditions PS3 Pollution Prevention and Abatement PS4 Community Health, Safety and Security PS5 Land Acquisition and Involuntary Resettlement PS6 Biodiversity Conservation and Sustainable Natural Resource Management PS7 Indigenous Peoples PS8 Cultural Heritage Equator Principles (www.equator-principles.com)www.equator-principles.com 13

14 IFCs Performance Standards: International Stamp of Approval Equator Principles adopted by 60+ of the worlds leading banks and based on IFCs Performance Standards Apply to 85% of project financing worldwide 14

15 What does this mean for the Insurer? Sustainable project Client with Risk Management understanding Improved performance - Monitored environmental performance - Fire & Life Safety focus - Social license to operate Operating in line with best practice 15

16 Thank you for your Interest 16


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