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Force Majeure Risk

   Also found in: Dictionary/thesaurus, Legal, Encyclopedia, Wikipedia, Hutchinson 0.01 sec.
Force majeure risk
The risk that there will be a prolonged interruption of operations for a project finance enterprise due to fire, flood, storm, or some other factor beyond the control of the project's sponsors.

Force Majeure Risk
The risk of loss to a company from an act of God. For example, force majeure risk is the risk that company will lose production from a factory if a tornado comes and destroys the factory. See also: Act of God bond.


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Projects face political and force majeure risks throughout.
Among them are: * interest rate risk, which is the risk that interest rates may vary over the life of the project; * exchange rate risk, which occurs if debt is payable in currencies other than the one in which revenues are generated; and * force majeure risk, which is the risk that the project will fail to generate revenues required to repay loans due to earthquakes, war, flood, fire, or "acts of God.
The project's contracts closely match expenses against revenues and require Ecopetrol to assume a large portion of the uncontrollable risks, such as currency-exchange-rate risk and force majeure risks.
 
 
 
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