What is a primary risk associated with infrastructure assets?

What is a primary risk associated with infrastructure assets?

• A. High liquidity
• B. Short payback period
• C. Corruption
• D. Guaranteed project completion

Answer: (C)

Infrastructure assets often involve significant capital investment and are generally subject to various risks, with corruption being a primary risk associated with their development and operation. Corruption can manifest in numerous ways, including bribery, misallocation of funds, and fraudulent practices, which can lead to cost overruns, project delays, and even project cancellations. In environments where governance is weak, the risk of corruption is heightened, and this can substantially affect the financial viability and integrity of the infrastructure project, impacting returns on investment. In contrast, high liquidity, a short payback period, and guaranteed project completion are generally not associated with infrastructure assets. These characteristics tend to reflect qualities of more conventional, liquid investments or promise levels of certainty that are not typically applicable to complex and lengthy infrastructure projects. Hence, corruption is particularly prominent due to the multifaceted challenges that accompany infrastructure investments, making it a critical risk factor to consider.

Infrastructure assets often involve significant capital investment and are generally subject to various risks, with corruption being a primary risk associated with their development and operation.

Corruption can manifest in numerous ways, including bribery, misallocation of funds, and fraudulent practices, which can lead to cost overruns, project delays, and even project cancellations. In environments where governance is weak, the risk of corruption is heightened, and this can substantially affect the financial viability and integrity of the infrastructure project, impacting returns on investment.

In contrast, high liquidity, a short payback period, and guaranteed project completion are generally not associated with infrastructure assets. These characteristics tend to reflect qualities of more conventional, liquid investments or promise levels of certainty that are not typically applicable to complex and lengthy infrastructure projects. Hence, corruption is particularly prominent due to the multifaceted challenges that accompany infrastructure investments, making it a critical risk factor to consider.