Reshaping Risk Mitigation: The Impact of Non-financial Levers

The report advocates for shifting from project-specific financial de-risking to systemic non-financial levers to attract private investment to emerging markets. It categorizes these measures into foundational, sectoral, and project levels and provides case studies from South Africa's renewable energy sector and Colombia's transport infrastructure to demonstrate how policy and institutional reforms reduce investment risk.

• Non-financial de-risking measures differ from financial instruments by addressing systemic root causes rather than individual transactions. While financial instruments like guarantees transfer risk costs—which are often passed to end-users—non-financial measures focus on "process improvement, institutional strengthening, policy enablement" and typically operate on a long-term horizon.
• The report proposes a three-tiered hierarchy of non-financial de-risking: foundational measures targeting macro-economic risks and national legislative frameworks; sectoral measures focusing on specific policies and legal systems for a given industry; and project-level measures such as the standardization of contractual documents.
• Implementing non-financial levers creates a leverage effect that reduces the necessity and cost of financial risk mitigation products. By improving the enabling environment and boosting investor confidence, these measures lower the risk premium of transactions over time.
• South Africa's Renewable Energy Independent Power Producer Procurement Programme (REIPPP) successfully attracted ZAR 209.7 billion ($17.5 billion) in total investment by mid-2020. Key non-financial drivers included the use of standardized, non-negotiable contracts, a competitive multi-bid round tender process that lowered tariffs, and clear policy roadmaps provided by the integrated resource plan (IRP).
• Colombia's 4G transport infrastructure programme mobilized $15.4 billion by reforming its legal and institutional framework to overcome previous corruption and inefficiency. Critical measures included the creation of the Financiera de Desarrollo Nacional (FDN) and La Agencia Nacional de Infraestructura (ANI), the enactment of a 2012 PPP law, and the adoption of international project finance standards.
• Unlocking non-financial de-risking requires collaboration between governments, development finance institutions (DFIs), and the private sector. Governments must provide political support and policy design, DFIs can provide technical assistance and coordination, and the private sector contributes technical expertise to formulate best practices.

APA

World Economic Forum (2021). Reshaping Risk Mitigation: The Impact of Non-financial Levers. http://www3.weforum.org/docs/WEF_Reshaping_Risk_Mitigation_2021.pdf

Chicago

World Economic Forum. Reshaping Risk Mitigation: The Impact of Non-financial Levers. 2021. http://www3.weforum.org/docs/WEF_Reshaping_Risk_Mitigation_2021.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=Reshaping Risk Mitigation: The Impact of Non-financial Levers |date=September 2021 |url=http://www3.weforum.org/docs/WEF_Reshaping_Risk_Mitigation_2021.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2021reshaping, author = {{World Economic Forum}}, title = {{Reshaping Risk Mitigation: The Impact of Non-financial Levers}}, institution = {World Economic Forum}, year = {2021}, month = sep, url = {http://www3.weforum.org/docs/WEF_Reshaping_Risk_Mitigation_2021.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }