Manufacturing Today - January/February 2017 - 16

make foreign currency payments
outside of the country.
* Customer - Demand for the
product or throughput declines
or widely fluctuates. Chief mitigant against this type of risk is an
offtake agreement, i.e., a contract,
which guarantees purchase of the
throughput.
* Industry - Competitive forces
within the industry represent significant risks to the project. For
instance two might be (1) the influence of other existing or planned
pipelines in the area; and (2) the cost
of transportation - the economics
of the pipeline to the end users.
16

manufacturing-today.com JANUARY/FEBRUARY 2017

* Funding - The funding risk is
that the capital necessary for the
project is not available.
* Interest Rate - Interest rate fluctuations represent a significant
hazard for highly leveraged project financings.
* Operating - Operating risks center around the efficient, continuous
operation of the project, whether
it is a mining operation, toll road,
power plant or pipeline. Contracted incentive schemes are one way
to allocate this risk to the operator.
* Political - These risks cover
changes within the country's political landscape, i.e., change of

administration, as well as changes
in national policies, laws, and regulatory frameworks.
* Product - Product risks might
include product liability, design
problems, etc. The underlying risk
here is unperceived hazards with
the product, e.g., unforeseen environmental damages.
* Project - Project risk is generally associated with the adequacy
and track record of the concerned
technology and the experience of
the project's management. The
chief mitigant in this area is the selection of contractors, developers
and operators who have proven
track records.
* Risk allocation - Just as important as identifying the risks is the
need to allocate the risks to the
parties that are most suited to control and address the risks. Thus,
risk allocation is a form of risk mitigation at the macro level.
* Sponsor - The primary risks
with sponsors revolve around the
sponsor's experience, management ability, its connections both
international and with the local
agencies, and the sponsor's ability
to contribute equity.
* Supplier - Not securing basic supplies for a project - electricity, water, etc. - is a huge mistake. The chief
instruments used to mitigate this
risk might include long-term agreements that guarantee the project
will have access to critical inputs for
the duration of the project's life.

SPACE TECH EXPO

SERVICE

F ABTECH

M A N U FA C T U R I N G
L E A N

C ANADA MANUFACTURING

AH
S R EXPO 2017

A ERODEF MANUFACTURING 2017

N EWS

T ECHNOLOGY

C ONTENTS

D IALOGUE

E MPLOYEES

S U P P LY C H A I N

M ANAGEMENT

C OVER STORY

L AST PAGE

P RO F I TA B I L I T Y

COLUMN BY | MICHAEL ADEBISI

4. Review all project documentation carefully - This risk is a language
risk, and a truly worrisome gauge
of desperation, which is dangerous
as some parties in the international
arena may not be honorable. All of
the preventions and research done


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Table of Contents for the Digital Edition of Manufacturing Today - January/February 2017

Table Of Contents
Manufacturing Today - January/February 2017 - Cover1
Manufacturing Today - January/February 2017 - Cover2
Manufacturing Today - January/February 2017 - 1
Manufacturing Today - January/February 2017 - Table Of Contents
Manufacturing Today - January/February 2017 - 3
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Manufacturing Today - January/February 2017 - 136
Manufacturing Today - January/February 2017 - Cover3
Manufacturing Today - January/February 2017 - Cover4
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