1. Gillian Waite - Senior Consultant Risk Consulting Practice BWEA - Offshore Quantification and Allocation of Risk 27th March 2003

2. 2 Marsh Current Situation Future Situation Threats? Bad things do not happen and Opportunities? Good things do happen Validating Future Situation Risk Risk Management Corporate Objectives and Strategy Maximise megawatts generated from offshore wind farms What is Risk?

3. 3 Marsh And What is Risk Management? Strategic Positioning Embedding Monitoring and Reporting Risk Action Plans Risk Identification Risk Assessment Culture & Integration: Communication  Processes & Procedures  Training

4. 4 Marsh Why do this? Aide memoir for Project Financing; – New technology for financiers so lack of information; – Provide an ‘education’ response. Pool knowledge to build strategy base for BWEA; – Consolidation and consensus of issues; – ‘Buy-in’ to strategy. Facilitate the ‘allocation’ of risk; – Most appropriate type of Risk Holder; – Facilitate action.

5. 5 Marsh How was this done? Focus on Identification and Prioritisation; Finance Forum submitted risks; Workshop, facilitated by Marsh: – Validated the Risk Issues; – Prioritised Risk Issues; Severity and likelihood; – Output - Risk Map; – Discussion of current mitigation activity; – Discussion of potential improvements. Results consolidated and issued.

6. 6 Marsh Findings - Key Themes (1/2) Importance of Government as a stakeholder; – As policy maker and risk taker; – ROC - Renewable Obligation Certificates. Implications of developing a new technology; – Scale and applicability of technology use; – Hence need for a ‘higher’ tolerance to risk; – Use of single contract structure resulting in higher contract prices. Need for learning and sharing of information; – Verses commercial sensitivity.

7. 7 Marsh Findings - Key Themes (2/2) Need to develop a set of ‘standards’; Concentration of Risk in the Development Phase; – ‘Design’ risks (threats) out. Importance of third-parties; – Crown Estates; – National Grid.

8. 8 Marsh Quantification and Allocation of Risk - What next? Develop BWEA strategy; – Validated issues for lobbying; – Management of issues. ‘Best’ allocation of risk issues; – Member groups of BWEA. Identify (other) stakeholders; – Enhance communication; – Seminars. Learning from PFI; Regular Finance Forum meeting.

9. Gillian Waite - Senior Consultant Risk Consulting Practice BWEA - Offshore Quantification and Allocation of Risk 27th March 2003