Risk Gaps: Executive Summary

The document identifies significant gaps in risk coverage for green investments, particularly regarding policy and financing risks, across both developed and developing markets. It argues that while public sector instruments like first-loss protection and policy risk insurance can alleviate these bottlenecks, their effectiveness is often limited by complexity, high transaction costs, and uncertainties regarding remedy timing. The report emphasizes that 'retroactive policy risk' is a primary threat to investor confidence and suggests that streamlining procedures and reducing costs are essential for scaling up private investment in climate-friendly infrastructure.

• There are systemic gaps in risk coverage for green investments, specifically concerning policy risks and financing risks, such as access to capital and investment exit/liquidity risks.
• In developed markets, gaps exist for policy risk due to frequent policy changes, as well as physical and technical risks for less mature technologies; meanwhile, in developing markets, financing risks are higher due to immature financial institutions and markets.
• First-loss protection instruments can improve an investment's financial profile and attract institutional investors by shielding them from a set amount of financial loss, though they may introduce moral hazard by attracting lower-quality projects.
• Retroactive policy risk—the possibility that governments change policies to the detriment of existing projects—is the most significant threat to investor confidence.
• Existing policy risk instruments, including MIGA's expropriation coverage and OPIC's feed-in-tariff insurance, are limited to large projects because of uncertainties regarding transaction costs, compliance, and the timing of remedies.

APA

Frisari, G., Hervé-Mignucci, M., Micale, V., & Mazza, F. (2013). Risk Gaps: Executive Summary. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2013/01/Risk-Gaps-Executive-Summary.pdf

Chicago

Frisari, Gianleo, Morgan Hervé-Mignucci, Valerio Micale, and Federico Mazza. Risk Gaps: Executive Summary. Climate Policy Initiative, 2013. https://www.climatepolicyinitiative.org/wp-content/uploads/2013/01/Risk-Gaps-Executive-Summary.pdf.

Wikipedia

{{cite report |last1=Frisari |first1=Gianleo |last2=Hervé-Mignucci |first2=Morgan |last3=Micale |first3=Valerio |last4=Mazza |first4=Federico |title=Risk Gaps: Executive Summary |publisher=Climate Policy Initiative |date=January 2013 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2013/01/Risk-Gaps-Executive-Summary.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{frisari2013risk, author = {Frisari, Gianleo and Hervé-Mignucci, Morgan and Micale, Valerio and Mazza, Federico}, title = {{Risk Gaps: Executive Summary}}, institution = {Climate Policy Initiative}, year = {2013}, month = jan, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2013/01/Risk-Gaps-Executive-Summary.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }