Risk Gaps: A Map of Risk Mitigation Instruments for Clean Investments

The report identifies significant gaps in risk mitigation for clean investments, particularly regarding policy and financing risks. It categorizes risks into four groups: political/policy/social, technical/physical, market/commercial, and outcome risks. In developed markets, gaps are most acute for policy risk due to retroactive support cuts and for technical risks in immature technologies. In developing markets, while the supply of political risk insurance is higher, policy risk remains under-covered and financing risks are exacerbated by weak domestic financial institutions. The authors argue that an optimal risk allocation framework should assign exogenous risks (like policy) to the public sector and endogenous risks (like technical) to the private sector.

• Green investments face higher risk perceptions than conventional investments due to their dependence on public policy and the relative immaturity of associated technologies, markets, and industries.
• In developed markets, there is a significant gap in risk coverage for policy risk, driven by retroactive cuts to support policies and the sovereign debt crisis.
• Technical and physical risk coverage in developed markets is inversely related to technology maturity; the most innovative technologies lack loss histories, leading insurers to either refuse coverage or charge uneconomical fees.
• Financing risks in developed markets, specifically liquidity and exit risks, are not adequately addressed by project-by-project interventions or the limited securitization market.
• Developing markets experience higher overall risk perceptions and higher supply of some instruments than developed markets, but still suffer from a gap in policy risk coverage.
• Financing risks in developing markets are heightened by the perceived weakness of domestic financial institutions and markets, and are often addressed by concessional resources that fail to improve investment liquidity.
• An optimal risk allocation framework suggests that exogenous risks (political, policy, and social) should be borne by the public sector, while endogenous risks (technical and physical) are more efficiently managed by the private sector.

APA

Frisari, G., Hervé-Mignucci, M., Micale, V., & Mazza, F. (2013). Risk Gaps: A Map of Risk Mitigation Instruments for Clean Investments. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2013/01/Risk-Gaps-A-Map-of-Risk-Mitigation-Instruments-for-Clean-Investments.pdf

Chicago

Frisari, Gianleo, Morgan Hervé-Mignucci, Valerio Micale, and Federico Mazza. Risk Gaps: A Map of Risk Mitigation Instruments for Clean Investments. Climate Policy Initiative, 2013. https://www.climatepolicyinitiative.org/wp-content/uploads/2013/01/Risk-Gaps-A-Map-of-Risk-Mitigation-Instruments-for-Clean-Investments.pdf.

Wikipedia

{{cite report |last1=Frisari |first1=Gianleo |last2=Hervé-Mignucci |first2=Morgan |last3=Micale |first3=Valerio |last4=Mazza |first4=Federico |title=Risk Gaps: A Map of Risk Mitigation Instruments for Clean Investments |publisher=Climate Policy Initiative |date=January 2013 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2013/01/Risk-Gaps-A-Map-of-Risk-Mitigation-Instruments-for-Clean-Investments.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{frisari2013risk, author = {Frisari, Gianleo and Hervé-Mignucci, Morgan and Micale, Valerio and Mazza, Federico}, title = {{Risk Gaps: A Map of Risk Mitigation Instruments for Clean Investments}}, institution = {Climate Policy Initiative}, year = {2013}, month = jan, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2013/01/Risk-Gaps-A-Map-of-Risk-Mitigation-Instruments-for-Clean-Investments.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }