Gillian Waite - Senior ConsultantRisk Consulting Practice

BWEA - OffshoreQuantification and Allocation of Risk

27th March 2003

Marsh 2

Current Situation

Future Situation

Threats? Bad things do not happen

andOpportunities?

Good things do happen

Validating Future Situation

Risk Risk Management

Corporate Objectivesand

Strategy

Maximise megawatts generated from offshore wind farms

What is Risk?

Marsh 3

And What is Risk Management?

Strategic Positioning

EmbeddingMonitoring

and Reporting

Risk Action Plans

Risk Identification

Risk Assessment

Culture & Integration:

CommunicationProcesses & Procedures Training

Marsh 4

Why do this?

Aide memoir for Project Financing;– New technology for financiers so lack of information;

– Provide an ‘education’ response.

Pool knowledge to build strategy base for BWEA;– Consolidation and consensus of issues;

– ‘Buy-in’ to strategy.

Facilitate the ‘allocation’ of risk;– Most appropriate type of Risk Holder;

– Facilitate action.

Marsh 5

How was this done?

Focus on Identification and Prioritisation;

Finance Forum submitted risks;

Workshop, facilitated by Marsh:– Validated the Risk Issues;

– Prioritised Risk Issues; Severity and likelihood;

– Output - Risk Map;

– Discussion of current mitigation activity;

– Discussion of potential improvements.

Results consolidated and issued.

Marsh 6

Findings - Key Themes (1/2)

Importance of Government as a stakeholder;– As policy maker and risk taker;

– ROC - Renewable Obligation Certificates.

Implications of developing a new technology;– Scale and applicability of technology use;

– Hence need for a ‘higher’ tolerance to risk;

– Use of single contract structure resulting in higher contract prices.

Need for learning and sharing of information;– Verses commercial sensitivity.

Marsh 7

Findings - Key Themes (2/2)

Need to develop a set of ‘standards’;

Concentration of Risk in the Development Phase;– ‘Design’ risks (threats) out.

Importance of third-parties;– Crown Estates;

– National Grid.

Marsh 8

Quantification and Allocation of Risk - What next?

Develop BWEA strategy;– Validated issues for lobbying;

– Management of issues.

‘Best’ allocation of risk issues;– Member groups of BWEA.

Identify (other) stakeholders;– Enhance communication;

– Seminars.

Learning from PFI;

Regular Finance Forum meeting.

Gillian Waite - Senior ConsultantRisk Consulting Practice

BWEA - OffshoreQuantification and Allocation of Risk

27th March 2003