Risk analysis and project financing

Project financing activity requires a deep analysis of economic and juridical aspects, but mathematical models can be used in order to achieve this. Dealing with the risks to face, can be done using the tools of Decision Theory, specifying creditors’ prudential behaviour (in particular, banks' behaviour), the tools of Financial Theory such as ‘strumenti derivati’ and specific insurance tools. The principal aim is to control project's net value time evolution, related to the connection between costs and benefits, introducing specific evaluation criteria. Optimization techniques allow us to identify optimal planning for both resources allocation and present economic return evaluation. Preparing the financial profile, it is possible to determine the optimal debt planning and the optimal time-sequence reimbursement planning. The goal of this paper is to show that the risk is the fundamental element: it is when the risk exceeds a determined level that it becomes necessary and significant to make a project financing analysis. The risk analysis has to be time evolving, because the parametric dependence of the reimbursement planning on the cash flow makes it possible to keep under control any project's benefits variation.