Document ID: chunk:federal_register_of_legislation:F2023L01671:clause:2_15:p1
Version: federal_register_of_legislation:F2023L01671
Segment Type: clause
Provision Reference: sch 2 cl 15 (pt 1/2)
Character Range: 17333–20490

15  Investment risk and monitoring
       (1)    The Facility must develop a statement outlining the risk strategy that will guide its decisions whether to offer financial assistance for Projects (Risk Appetite Statement).
       (2)    The Risk Appetite Statement must be developed in consultation with the responsible Ministers, and be approved by the Board.
       (3)    The Risk Appetite Statement must:
 (a) preference a diversified portfolio, including industry and geographic spread across the jurisdictions comprising Northern Australia; and
 (b) have a high risk tolerance in relation to factors unique to investing in Northern Australia economic infrastructure, including distance, remoteness and climate; and
 (c) consider risks shared between the Facility and the Commonwealth; and
 (d) identify and consider climate change-related risks, including increased variability and intensity of weather; and
 (e) identify and consider net zero transition risks as new energy technology is commercialised at scale, including potential for assets to become stranded due to industry transition toward clean energy; and
 (f) be reviewed at least annually to address emerging risks, changes to existing risks, and changes to Government policy.
 (4) In managing its portfolio of investments, the Facility must:
 (a) operate with a commercial approach, including by undertaking appropriate due diligence and credit and investment risk assessment processes; and
 (b) seek to develop the Facility's portfolio in a way that seeks to avoid excessive concentration risk (for example, geographical and sectoral concentration); and
 (c) periodically review the Facility's investment and operational practices for the purposes of managing the risk of the Facility's portfolio over time.
 (5)  The Facility must actively monitor and manage investment performance, including:
 (a) administering each grant of financial assistance with due care and diligence; and
 (b) developing and implementing early-warning systems for the identification of emerging issues; and
 (c) developing and implementing management plans for each impaired or troubled investment, including, where appropriate, in consultation with the Project Proponent; and
 (d) take appropriate action to limit the Facility's exposure to impaired or troubled assets, for example by enforcing contractual rights or appointing a receiver; and
 (e) notifying the responsible Ministers at the time an investment becomes impaired or troubled; and
 (f) providing quarterly reports on impaired or troubled investments to the responsible Ministers by 30 September, 31 December, 31 March and 30 June of each year.
 (6) The Facility must actively monitor and manage the risks associated with its use of derivatives including through ensuring that:
 (a) a derivatives risk policy is in place and is reviewed annually;
 (b) appropriate contracts exist between the Facility and counter-parties;
 (c) a derivative exposure and risk management report is included in regular reporting; and
 (d) the net liabilities under derivatives arrangements at no time exceed the amount of the uncommitted balance of the appropriation