Perú: Reserva Ecológica Inkaterra

Risk Assessment

Despite the sustainability factors above, the project faces risks associated with constructing the new ecotourism attractions, achieving sufficient revenues, retaining the long-term concession to the IER, and maintaining successful relations with local stakeholders. The following table lays out these risks and the corresponding mitigation strategies.

Project Risks and Corresponding Mitigation Strategies

	Risk Description	Level	Risk Mitigation Strategies
Construction	Delays in work completion	Low	ITA will hire & closely supervise highly qualified personnel. It will undertake realistic planning that considers climatic, operational and social factors.
	Mistakes in architectural design	Low	ITA will hire a qualified architect, who has experience at Palma Real.
	Delay in work initiation	Low	ITA will have strong agreements with contractors and realistic start dates.
	Costs overruns	Medium	ITA has established detailed budgets that anticipate hidden costs. And ITP will contribute additional funds if necessary.
	Non-compliance in delivery of materials	Low	ITA will purchase materials from experienced contractors in the area.
Market	Inability to attract sufficient clients to Palma Real	Low	ITP will utilize its linkages with tour operators & other marketing capacities to attract clients from Cusco
	Competition with Tambopata or Manu as a tourist destination	Low	ITA will focus on an upscale customer niche who could not be properly served as these other destinations.
	Competition with other lodges of the area	Medium	There are numerous competitors in the Peurto Maldonado region. But Inka Terra will focus on the upscale niche.
	Price war with the area’s competitors	Low	Inka Terra will avoid a price war by focusing on its own particular market niche (i.e., upscale clientele).
	Political Instability in Puerto Maldonado and/or nationally in Peru	Low	Political risk at the national level is outside of Inka Terra’s control. However, Inka Terra has contingency plans and routes to ensure that guests may be transported in & out if there is political unrest in Puerto Maldonado (which is unlikely).
Staffing and Technical capacity	Adequate staff available	Medium	Proactive training and recruitment
Operations	Power supply loss	Low	Inka Terra has a good generator so this risk is low. But if power goes out, it has packaged goods in stock that do not require refrigeration.
	Water supply loss	Low	ITA has a filtration system for river water
	Staff/customer accidents	Low	Inka Terra will have appropriate insurance policies. Safety procedures and equipment will be installed/implemented.
	Poor solid, liquid, air waste handling	Low	Adequate systems have been installed and will be properly maintained.
Governmental	Change in regulations regarding the permissibility of private conservation concessions	Low	A supportive law called the Wildlife and Forestry Act (Law Nº 27308) has already been passed by the Peruvian Congress. It explicitly allows INRENA to award conservation concessions to private groups.
	INRENA does not renew the concession for the reserve	Low	INRENA has indicated that ITA may be in charge of managing the reserve.
Social	Community development activities lead to inmigration	Low	ITA will work with the local communities so that they understand that it is not in their interest to allow additional inmigration because the available financial resources would get divided among a larger group of people; thus, each family would receive fewer benefits if inmigration occurs.
	Relationships with local communities deteriorate	Low	ITA has established a community development plan that provides real benefits that are desired by the local communities. The local communities will also be closely involved in many aspects of project implementation; it will be highly participatory.