Risk Gaps: Executive Summary

This executive summary, produced by the Climate Policy Initiative for the San Giorgio Group, analyzes the gaps between the demand for and supply of risk mitigation instruments in low-carbon and climate-resilient investments. It identifies significant bottlenecks in financing and policy risk coverage across both developed and developing markets and evaluates the potential of first-loss protection and policy risk insurance to bridge these gaps.

• There are significant gaps in risk coverage for green investments, specifically regarding policy risks and financing risks, including 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 immature technologies. In developing markets, financing risks are higher due to immature financial institutions and markets, and policy risk coverage remains insufficient.
• First-loss protection instruments can improve the financial profile and creditworthiness of investments, potentially attracting institutional investors and reducing perceived liquidity risks. Examples include the European Commission – European Investment Bank Project Bond Initiative (PBI) and the Sustainable Development Bond Assurance Corporation (SDBAC). To be effective, these must be priced competitively, match investor risk-adjusted return requirements, and have a transformative impact on low-carbon investments, though they risk creating moral hazard by attracting lower-quality projects.
• Policy risk insurance, particularly coverage against 'retroactive policy risk' where governments change policies to the detriment of existing projects, is critical for investor confidence. While Multilateral Investment Guarantee Agency (MIGA) expropriation coverage, Partial Risk Guarantees (PRGs), and Overseas Private Investment Corporation (OPIC) feed-in-tariff insurance can address these risks, their effectiveness is limited by uncertainties regarding timing, transaction costs, and compliance, often restricting their use to large projects.

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} }