{
  "url": "https://openlegislation.uk/eu-regulation-2015-207/annex-III/division-2/division-2.4",
  "json_url": "https://openlegislation.uk/eu-regulation-2015-207/annex-III/division-2/division-2.4.json",
  "legislation": "eur/2015/207",
  "legislation_title": "Commission Implementing Regulation (EU) 2015/207 of 20 January 2015 laying down detailed rules implementing Regulation (EU) No 1303/2013 of the European Parliament and of the Council as regards the models for the progress report, submission of the information on a major project, the joint action plan, the implementation reports for the Investment for growth and jobs goal, the management declaration, the audit strategy, the audit opinion and the annual control report and the methodology for carrying out the cost-benefit analysis and pursuant to Regulation (EU) No 1299/2013 of the European Parliament and of the Council as regards the model for the implementation reports for the European territorial cooperation goal",
  "legislation_url": "https://openlegislation.uk/eu-regulation-2015-207",
  "path": "annex/III/division/2/division/2.4",
  "kind": "division",
  "number": "2.4",
  "heading": "Risk assessment",
  "text": "As set out in Article 101(1)(e) of Regulation (EU) No 1303/2013, a risk assessment must be included in the CBA. This is required to deal with the uncertainty that always permeates investment projects. Risk assessment enables the project promoter to better understand the way the estimated impacts are likely to change should some key project variables turn out to be different from those expected. A thorough risk analysis constitutes the basis for a sound risk-management strategy, which in turn feeds back into the project design. Particular attention should be paid to climate change and environmental aspects.\nThe risk assessment shall comprise two steps:\n(1) Sensitivity analysis, which determines the ‘critical’ variables or parameters of the model i.e. those whose variations, positive or negative, have the greatest impact on the project's performance indicators, shall take the following aspects into consideration:\nthe critical variables are the ones whose 1 % variation results in more than 1 % variation of the NPV;\nthe analysis is carried out by varying one element at a time and determining the effect of that change on the NPV;\nthe switching values are defined as the percentage change the critical variable should assume to make the NPV equal to zero;\nscenario analysis allowing the study of the combined impact of determined sets of critical values and in particular, the combination of optimistic and pessimistic values of a group of variables to build different scenarios, which may hold under certain hypotheses.\n(2) Qualitative risk analysis including risk prevention and mitigation, which shall include the following elements:\na list of risks to which the project is exposed;\na risk matrix showing for each identified risk:\nthe possible causes of failure,\nthe link with the sensitivity analysis, where applicable,\nthe negative effects generated on the project,\nthe ranked (e.g. very unlikely, unlikely, about as likely as not, likely, very likely) levels of probability of occurrence and of the severity of impact,\nthe risk level (i.e. combination of probability and impact).\nidentification of prevention and mitigation measures, including the entity in charge of preventing and mitigating the main risks, standard procedures, where appropriate and taking into account best practices, where possible, to be applied to reduce risk exposure, where considered necessary.\ninterpretation of risk matrix including an assessment of the residual risks after the application of prevention and mitigation measures;\nIn addition the risk assessment may, where appropriate (depending on project size, data availability), and should, where the residual risk exposure is still significant, include the probabilistic risk analysis, which involves the following steps:\n(1) Probability distributions for critical variables informing about the likelihood of occurring a given percentage change in the critical variables. Computing the probability distribution of critical variables is necessary to carry out a quantitative risk analysis.\n(2) Quantitative risk analysis based on Montecarlo simulation, providing probability distributions and statistical indicators for expected result, STD, etc. of project financial and economic performance indicators.\nThe main risks per sector to be taken into account in the risk assessment are set out in Table 2.\nIn order to assist the project promoters in preparation of qualitative risk analysis in line with this Regulation, Member States are encouraged (if they consider this appropriate and/or feasible) to develop national guidelines on valuation of certain standard project risks, and list of mitigation and prevention measures across sectors.\nTable 2\nSector/Subsector\nSpecific risks\nWater supply and sanitation\nDemand risks:\n(i) Water consumption lower than predicted\n(ii) Connection rate to public sewage system slower than predicted\nDesign risks:\n(iii) Inadequate surveys and investigation e.g. inaccurate hydrological predictions\n(iv) Inadequate design cost estimates\nLand acquisition risks:\n(v) Procedural delays\n(vi) Land cost higher than predicted\nAdministrative and procurement risks:\n(vii) Procedural delays\n(viii) building or other permits\n(ix) utility approval\n(x) Legal proceedings\nConstruction risks:\n(xi) Project cost overruns and delays in construction\n(xii) Contractor related (bankruptcy, lack of resources)\nOperational risks:\n(xiii) Reliability of identified water sources (quantity/quality)\n(xiv) Maintenance and repair costs higher than predicted, accumulation of technical breakdowns\nFinancial risks:\n(xv) Tariff increases slower than predicted\n(xvi) Tariff collection lower than predicted\nRegulatory risks\n(xvii) unexpected political or regulatory factors affecting the water price\nOther risks:\n(xviii) Public opposition\nWaste management\nDemand risks:\n(i) Waste generation lower than predicted\n(ii) Waste flow control/delivery insufficient\nDesign risks:\n(iii) Inadequate surveys and investigation\n(iv) Choice of unsuitable technology\n(v) Inadequate design cost estimates\nLand acquisition risks:\n(vi) Procedural delays\n(vii) Land cost higher than predicted\nAdministrative and procurement risks:\n(viii) Procedural delays\n(ix) Building or other permits\n(x) Utility approvals\nConstruction risks:\n(xi) Project cost overruns and delays in construction\n(xii) Contractor related (bankruptcy, lack of resources)\nOperational risks:\n(xiii) Waste composition other than predicted or having unexpectedly large variations\n(xiv) Maintenance and repair costs higher than predicted, accumulation of technical breakdowns\n(xv) Process outputs fail to meet quality targets\n(xvi) Failure to meet limits of emissions produced by the facility (to air and/or water)\nFinancial risks:\n(xvii) Tariff increases slower than predicted\n(xviii) Tariff collection lower than predicted\nRegulatory risks:\n(xix) Changes of environmental requirements, economic and regulatory instruments (i.e. introduction of landfill taxes, bans on landfilling)\nOther risks:\n(xx) Public opposition\nEnergy\nDemand risks:\n(i) Demand shortfalls\n(ii) Evolution of prices of different competing fuels\n(iii) Inadequate analysis of climatic conditions affecting the energy demand for heating and/or cooling\nDesign risks:\n(iv) Inadequate design cost estimates\n(v) Inadequate site surveys and investigation\n(vi) Innovation in energy production/transmission or energy storage technology making the one in the project obsolete\nLand acquisition risks\n(vii) Land costs higher than predicted\n(viii) Higher costs for the acquisition of rights of way\n(ix) Procedural delays\nAdministrative and procurement risks:\n(x) Procedural delays\nConstruction risks:\n(xi) Project cost overruns and delays in construction\n(xii) Flooding, landslides, etc.\n(xiii) Accidents\nOperational risks:\n(xiv) Maintenance and repair costs higher than predicted, accumulation of technical breakdowns, for example those caused by climate change impacts\n(xv) Long out-of-service time for accident or external causes\nFinancial risks:\n(xvi) Changes in the tariff system and/or in the system of incentives\n(xvii) Inadequate estimate of energy price trends\nRegulatory risks:\n(xviii) Changes of environmental requirements, economic instruments (i.e. RES support schemes, EU ETS design)\nOther risks:\n(xix) Public opposition\nRoads, Railways, Public Transport, Airports, Seaports, Intermodal\nDemand risks:\n(i) Traffic forecasts different than predicted\nDesign risks:\n(ii) Inadequate site surveys and investigation\n(iii) Inadequate design cost estimates\nAdministrative and procurement risks:\n(iv) Procedural delays\n(v) Building permits\n(vi) Utility approvals\nLand acquisition risks:\n(vii) Land costs higher than predicted\n(viii) Procedural delays\nConstruction risks:\n(ix) Project cost overruns\n(x) Flooding, landslides, etc.\n(xi) Archaeological findings\n(xii) Contractor related (bankruptcy, lack of resources)\nOperational risks:\n(xiii) Operation and maintenance costs higher than expected\nFinancial risks:\n(xiv) Tolls collection lower than expected\nRegulatory risks:\n(xv) Changes in environmental requirements\nOther risks:\n(xvi) Public opposition\nRDI\nDemand risks:\n(i) Development of relevant industry (demand for research results and demand for private contracted research)\n(ii) Evolutions on labour market (demand for university graduates and impact on demand for education services in the area)\n(iii) Interest of the general public different than predicted\nDesign risks:\n(iv) Inadequate design cost estimates\n(v) Inadequate site selection or delays in completing the project design\n(vi) Invention of a new RDI technology making the infrastructure's technology obsolete\n(vii) Lack of well-established technical engineering expertise\nAdministrative and Procurement risks:\n(viii) Delays in obtaining building permits\n(ix) Unresolved property ownership rights\n(x) Delays in the acquisition of intellectual property rights or higher-than-expected costs for their acquisition\n(xi) Procedural delays to select the supplier and sign the procurement contract\n(xii) Supply bottlenecks\nConstruction risks:\n(xiii) Project delays and cost overruns during installation of scientific equipment\n(xiv) Lack of ready-made solutions to meet the needs arisen during the construction or operation of the infrastructure\n(xv) Delays in complementary works outside the project promoter's control\nOperational risks:\n(xvi) Lack of academic staff/researchers\n(xvii) Unexpected complication connected with the installation of specialised equipment\n(xviii) Delays in making the equipment fully and reliably running\n(xix) Insufficient production of research results\n(xx) Unexpected environmental impacts/accidents\nFinancial risks:\n(xxi) Insufficient committed funding on a national/regional level during the operational phase\n(xxii) Inadequate estimate of financial revenues\n(xxiii) Failure to meet the demand from users\n(xxiv) Inadequate system for protection and exploitation of intellectual property\n(xxv) Loss of existing clients/users due to competition from other R+D centres\nBroadband\nContext and regulatory risks:\n(i) Change of orientation of the strategic policy\n(ii) Change in excepted behaviour of future private investors\n(iii) Change in regulations in the retail market\n(iv) Unsuccessful State-aid application\nDemand risks:\n(v) Lower than estimated service take-up from retail- and/or wholesale providers\n(vi) Low investments in ‘last mile’ network by service providers\nDesign risks:\n(vii) Inadequate design cost estimates\nAdministrative and procurement risks:\n(viii) Delays in project procurement\n(ix) Risk of not obtaining required property rights\nOperational and financial risks:\n(x) Increase in operational cost\n(xi) Insufficient committed funding on a national/regional level during the operational phase\n(xii) Loss of key personnel during project operation",
  "extent": "E+W+S+N.I.",
  "status": null,
  "version": "current",
  "annotations": [],
  "outstanding_effects": [],
  "provenance": {
    "source": "legislation.gov.uk",
    "source_url": "https://www.legislation.gov.uk/eur/2015/207/annex/III/division/2/division/2.4",
    "retrieved_at": "2026-11-01T14:46:53.697481+00:00"
  },
  "licence": "Open Government Licence v3.0",
  "licence_url": "https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/",
  "attribution": "Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives."
}