Risk Management Should Follow the Project Lifecycle
One common mistake is to treat insurance as a one-time transaction.
The project is insured. The policy is issued. The requirement is checked.
But a geothermal project does not have a static risk profile.
Its exposure evolves throughout its lifecycle:
Development
↓
Construction
↓
Transportation & Installation
↓
Testing & Commissioning
↓
Commercial Operation
↓
Long-Term Operations
The risk-management strategy should evolve with it.
During construction, the insurance programme may need to consider exposures such as:
- Construction All Risks / Erection All Risks
- Marine Cargo
- Third-Party Liability
- Delay in Start-Up
Once the project enters operations, the focus may shift toward:
- Property Damage
- Machinery Breakdown
- Business Interruption
- Liability
- Other project-specific operational exposures
The exact insurance structure should always reflect the project's actual risk profile, contractual requirements and available insurance market conditions.
The key principle is simple:
Insurance should be designed around the risk—not around a standard checklist.
This requires understanding the project before determining the appropriate risk-transfer structure.
From Risk Management to Bankability
For investors and lenders, effective risk management provides something extremely valuable:
Confidence.
A bankable geothermal project requires more than a proven resource, a viable PPA, attractive project economics, experienced contractors and appropriate technology.
It also requires a credible answer to one fundamental question:
What happens when something goes wrong?
That answer should already exist before an accident or major loss occurs.
A resilient project therefore needs a combination of:
- Risk identification
- Engineering controls
- HSE systems
- Contractual risk allocation
- Emergency response
- Business continuity planning
- Adequate financial reserves
- Appropriate insurance protection
Together, these form a broader resilience strategy.
The objective is not to eliminate every possible risk. It is to ensure that an unexpected event does not immediately undermine the project's ability to complete construction, achieve COD, maintain operations and generate the cash flow on which the investment case depends.
The Bigger Picture
The Resource Creates the Opportunity. Execution Creates the Asset.
Indonesia's geothermal potential is significant. But potential only becomes economic value when it is successfully converted into productive infrastructure.
That transformation follows a clear chain:
- Exploration proves the opportunity.
- Engineering designs the solution.
- Procurement secures the critical components.
- Construction creates the physical asset.
- Commissioning proves performance.
- Operations generate the revenue.
And throughout the entire journey:
Risk management protects the value being created.
This is why risk management should not be treated simply as a requirement imposed by insurers or lenders.
It should be considered part of project management and investment management itself.
The Real Lesson
The first question in a geothermal development may be:
Can we prove the resource?
But once the answer is yes, another question becomes more important:
Can we successfully convert that resource into a reliable, bankable and resilient energy asset?
Achieving that objective requires much more than drilling success.
It requires disciplined execution, strong engineering, effective contractor management, reliable equipment, proper commissioning, operational preparedness and a well-designed risk-transfer strategy.
Ultimately:
- The resource creates the opportunity.
- Execution creates the asset.
- Reliability creates the cash flow.
- Risk management protects the value.
And that is the real challenge—and opportunity—behind Indonesia's geothermal future.
