proposals – Addendum

RISK ASSESSMENT AND MANAGEMENT
GREEN CLIMATE FUND FUNDING PROPOSAL | PAGE 54 OF 101
G
G.1. Risk Assessment Summary
The following risks have been identified:
Financial risks: No relevant risk has been identified in this category. PROFONANPE has over 20 years of
experience in managing, channelling, supporting and supervising project execution, with considerable success
in carrying out its fiduciary responsibilities. Delay in securing co-financing, other than the endowment fund of
PROFONANPE, does not affect the proposed core activities. Given that the Government of the Republic
Korea is co-financing a technology-enhancing component, no risk is associated with such a grant, planned to
become effective by the fourth quarter of 2016.
Technical risks: The project does not include complex technologies. Natural products (pulp, flour, oils) are
processed/extracted through the use of proven technologies, which the project seeks to adapt to the particular
setting of the Amazon Basin and to improve through innovation and science.
Operational risks: (a) Development of a negative perception of project activities or personnel by key
stakeholders; and (b) difficulties in hiring proficient and experienced personnel to work in Datem del Marañón
for the duration of the project. Other operational risks include: market failure and lack of local skills related to
the maintenance of the bio-business’ equipment.
Social risks: Potential heightening of social tensions associated with newcomers and immigrants to the
province. As indicated in the analysis of threats to the area of interest, very strong external forces are exerting
pressure on Datem del Marañón. These include illegal forest harvesting and cutting and/or the search for
highly adaptable areas for palm oil plantations.
Environmental risks: Although the project’s environmental category is “C” (very low environmental impact),
other external environmental events could disrupt the project’s performance: (a) severe droughts and
associated fires; and (b) large oil spills that affect swamps, aguajales, and associated ecosystems, killing
vegetation and reducing production of inputs for bio-businesses. Such events could force the communities to
seek other areas to harvest; this could have potential social, economic and environmental consequences.
Political risks: Elections for the executive and legislative branches are to be held in 2016. Political shifts could
reduce the national government’s interest in channelling resources to the project area.
Performance risks: External market conditions or lower than expected demand could affect the performance of
bio-businesses.
G.2. Risk Factors and Mitigation Measures
Selected Risk Factor 1
Description
Risk
category
Level of risk
Probability of risk
occurring
Development of a negative perception of project
activities or personnel by key stakeholders. Although
the previous project built trust with all indigenous
communities, there is a potential risk for the
relationship to sour with some key stakeholders. The
likely consequence would be a protracted project, with
Technical and
operational
Low (