---
title: "Managing three hydropower project risks"
subject: "Project Engineering"
chapter: 5
key: "semester_7/project_engineering:risk-manage-three-hydropower-risks"
source: https://www.bctengineer.com/q/semester_7/project_engineering/risk-manage-three-hydropower-risks
site: BCT Engineering
---

# Managing three hydropower project risks

Project Engineering · Chapter 5: Project Risk Analysis and Management

- Asked in: 2072 Chaitra, 5 marks
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_7/project_engineering/risk-manage-three-hydropower-risks
- Whole chapter: https://www.bctengineer.com/md/semester_7/project_engineering/chapter-5

## Question

How can risk be managed? Explain how you manage three risks in the hydropower project you identified above.

## Short answer

Risk is managed by identification, analysis, response planning, and monitoring. Geological risk is reduced by extra drilling, flexible support, and experienced contractors; flood risk is transferred by insurance and reduced by dry-season river works; land/licence/transmission delay is avoided by early acquisition, consultation, and parallel transmission construction.

## Answer

Risk is managed by identification, analysis, response planning and monitoring. For a hydropower project, three main risks are managed as follows.

| Risk | Analysis | Response (strategy) |
|---|---|---|
| **1. Geological risk** (poor rock, tunnel collapse) | High probability, high impact | **Reduce:** extra drilling and geophysical survey, rock classification (Q-system), flexible support design; contingency reserve; experienced tunnelling contractor |
| **2. Flood and natural hazards** | Low probability, very high impact | **Transfer:** Contractor's All Risk insurance; **Reduce:** design the headworks and diversion works for the design flood; schedule river works in the dry season |
| **3. Delay in land, licence and transmission line** | Medium probability, high impact | **Avoid / reduce:** early land acquisition and compensation, community consultation, PPA and licence secured before financial close, parallel construction of the transmission line; liquidated damages in the contract |

Each risk gets a risk owner, a trigger (e.g. unexpected rock fall, rising river level) and a budget in the contingency reserve, and it is reviewed in monthly meetings.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. Which strategy and actions manage geological risk in the answer?
   A. Reduce: extra drilling, geophysical survey, Q-system, flexible support
   B. Transfer: CAR insurance only
   C. Accept: do nothing
   D. Avoid: cancel the project
   Answer: A. Poor rock is reduced by more investigation, rock classification, flexible support, reserve and an experienced contractor. (Key point: Geological risk response)

2. How is flood and natural hazard risk handled?
   A. Transfer by CAR insurance and reduce by design flood, diversion works and dry-season river works
   B. Accept only
   C. Avoid by building on the river bank
   D. Transfer to the community
   Answer: A. Flood is low probability and very high impact, so insurance transfers it and design/scheduling reduce it. (Key point: Flood response)

3. Which actions manage delay in land, licence and transmission line?
   A. Early land acquisition, community consultation, PPA and licence before financial close, parallel transmission line, liquidated damages
   B. Wait for the delay to occur
   C. Raise tariff
   D. Ignore the licence
   Answer: A. These avoid/reduce the delay causes and use liquidated damages to transfer delay cost. (Key point: Delay risk response)

4. What does each managed risk get?
   A. Owner, trigger, contingency reserve budget and monthly review
   B. Only an owner
   C. Only an insurance policy
   D. Nothing until it occurs
   Answer: A. Each risk has an owner, a trigger, a reserve budget and is reviewed in monthly meetings. (Key point: Per-risk management details)

## Related in Project Engineering

- [Internal/external risks; Nepal; hydropower](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-internal-external-nepal-hydropower) — Project Engineering, chapter 5
- [Define risk, types, manage with risk cycle](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-define-types-manage-cycle) — Project Engineering, chapter 5
- [Manage risk; qualitative and quantitative system](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-manage-qualitative-quantitative) — Project Engineering, chapter 5
- [Risk management cycle; managing risk effectively](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-management-cycle-manage-effectively) — Project Engineering, chapter 5
- [Impact of unmanaged risk; risks by phase](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-impact-unmanaged-phases) — Project Engineering, chapter 5
- [Need of risk management; hydropower risk types](https://www.bctengineer.com/question.md?key=semester_7%2Fproject_engineering%3Arisk-management-necessary-hydropower-types) — Project Engineering, chapter 5

## Related in other subjects

- [Manage and perform project work](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Amanage-project-work) — ICT Project Management, chapter 7
- [Gumbel flood at given risk, 50-year project life](https://www.bctengineer.com/question.md?key=semester_5%2Fengineering_hydrology%3Agumbel-risk-63-58-4200) — Engineering Hydrology, chapter 6
- [Project risk](https://www.bctengineer.com/question.md?key=semester_7%2Fict_project_management%3Aproject-risk) — ICT Project Management, chapter 12
- [Stages of hydropower project study](https://www.bctengineer.com/question.md?key=semester_6%2Fhydro_power%3Ahydropower-study-stages) — Hydro Power, chapter 3, asked 3×