Risk management crucial in securing infrastructure funding says Glaser

Speaking exclusively to Commercial Risk Europe at Marsh’s Infrastructure Risk Navigating Financing Challenges conference this week, Mr Glaser said that there is abundant capacity for infrastructure projects but concerns over the risk landscape is preventing its full deployment. Armed with a penetrating knowledge of the risks, the experience and tools to manage them correctly and advocating the rewards that such projects can bring, the risk management and risk transfer community has the power to obtain the levels of finance needed to bring about much needed investment, he added. According to Mr Glaser the tight supply of capital for infrastructure projects is predominantly due to concern over current macro factors such as economic risk, political risk, social risk and environmental risk, rather than typical project risks.hide“The money and the capital is there,” he said. ‘If you look at the sheer amount of money that is being held on balance sheets and within the investor community it is not a lack of capital that is causing this lack of investment, it is concerns around risk that is preventing its use. Risk might not be greater but risk awareness has certainly been heightened so executives and potential investors and lenders are much more risk aware.” Risk management must play an important role in freeing up that capital by first addressing these risks and then helping to calm concerns. “The more we can demystify risk and develop a more intimate knowledge of the risks that are associated with large capital projects the more likely that project is going to find funding. It is all about the availability of funds which is linked to risk management,” argued Mr Glaser. Whether it is government projects, private enterprises, joint ventures, public and private partnerships or national government organisations that are looking to drive developments, none can succeed if the risks cannot be adequately identified, quantified, measured and then managed, he added. Be it concerns over political risk, trade credit, contract frustration, nationalisation, regulatory intervention, commodity prices or any other genre of risk, as long as risk managers and the risk transfer industry work together they can tackle many of these issues, he said. “Today it is all about the art and science of risk management in helping to drive infrastructure rejuvenation and creation. We stand at the threshold of a brave new world. Never before has there been the need and opportunity on this scale. What we choose to do and how well we do it will determine the arc of life and pages of history for generations to come,” continued Mr Glaser. Failure to mobilise funding could have a huge impact for large parts of the global population that need investment in infrastructure to provide basics such as food, energy and water, he continued. “BRIC companies will need to spend around six trillion dollars over next three years to meet the basic needs of their citizens, plus the developed countries may arguably have an even greater funding requirement for infrastructure rejuvenation and construction as they have much more in place that is decaying, obsolescing or obsolete.” The role of the broker in today’s world is first and foremost as a risk advisor and, as such, they can help provide clients with advice on how to avoid and mitigate these risks, as well as transfer the excess, said Mr Glaser. “There is margin and profit in the retention of risk. Without risk there is no reward. Today it is more about understanding risk and taking a very learned view with regard to risk management,” he said. “The broker model itself is much more a linked advisory and transactional model rather than a pure transactional model,” he explained. Speaking to CRE, Mr Glaser also defended the risk transfer industry’s performance on innovation. He pointed to directors and officers insurance, trade credit insurance, political risk insurance, supply chain insurance and cyber risk cover as examples of innovation over the last 25 years. “I believe we are a tremendously innovative industry. Whilst I have heard the knock on the insurance industry many times over innovation I, for one, really think it is overstated,” he argued.

Risk management crucial in securing infrastructure funding says Glaser

Want to read this article?

Read Next

Zurich expects P&C prices to hold stable after commercial rates rise 5% in Q1

Multinationals may seek to relocate supply chains to avoid ESG demands

Swiss Re Corporate Solutions posts another healthy result

New publication aims to make CSRD accessible for all

ESMA guidelines on funds’ names using ESG or sustainability-related terms

Zurich expects P&C prices to hold stable after commercial rates rise 5% in Q1

Multinationals may seek to relocate supply chains to avoid ESG demands

Swiss Re Corporate Solutions posts another healthy result

New publication aims to make CSRD accessible for all

ESMA guidelines on funds’ names using ESG or sustainability-related terms

Want to read this article?

Read Next

Zurich expects P&C prices to hold stable after commercial rates rise 5% in Q1

Multinationals may seek to relocate supply chains to avoid ESG demands

Swiss Re Corporate Solutions posts another healthy result

New publication aims to make CSRD accessible for all

ESMA guidelines on funds’ names using ESG or sustainability-related terms

Related Articles