Definitions
De-risking according to the Oxford dictionary is used more often in the business context to take steps to make (something) less risky or less likely to involve a financial loss. In global banking, the concept of de-risking is an option for financial institutions to mitigate risk in banking by restricting its services to certain types of clients or customers.
De-risking refers to the practice whereby financial institutions exit relationships with and closing the accounts of clients perceived to be high risk. Adopting the concept in the power sector will require risk assessment for a better market design. Exploring how risk (for example, financing risk) can be managed by addressing the fundamental causes and distributing the residual risk evenly among all parties involved in the project. This is made possible through thorough investigation and development of risk analysis methods using project finance theory to manage risk peculiar to power projects.
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Alabi Ayotomiwa, O., Nwobi Lucy, D. (2020). De-risking Investment in Power Projects. In: Leal Filho, W., Azul, A., Brandli, L., Özuyar, P., Wall, T. (eds) Affordable and Clean Energy. Encyclopedia of the UN Sustainable Development Goals. Springer, Cham. https://doi.org/10.1007/978-3-319-71057-0_27-1
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