Choose and customize risk factors

Review the starting set

Read every suggested factor before selecting it. The asset-class library helps organize common topics, but it cannot know your actual strategy, leverage, counterparties, ownership, regulation, or investor circumstances.

Add the material specifics

Consider financing and refinancing, market conditions, valuation, liquidity and transfer restrictions, operator dependence, conflicts, taxes, environmental matters, concentration, execution, and the possibility of loss as applicable. Explain the actual exposure rather than copying generic warnings.

Avoid checkbox completion

Selecting a large number of factors does not make a PPM complete. Remove irrelevant text, reconcile inconsistencies, and ask counsel to identify omitted or misleading disclosure. Revisit the risk section after changes to the business plan or economics.

Connect the risk to your actual plan

For each material risk, explain the exposure and how it could affect cash flow, value, distributions, or loss of capital. A risk about refinancing is more useful when the strategy depends on a near-term loan maturity; a customer concentration risk is more useful when a large customer represents a material share of revenue.

Starting risk language must be adapted to the deal. Remove inapplicable claims, add risks specific to the asset and security, and check that the strategy does not promise away the risks described elsewhere. Counsel should review both coverage and the accuracy of the underlying facts.