Tuesday, January 24th @ 11:00-12:30 PM (ZOOM)
The aim of this research is to estimate production losses at company locations to enable the quantification of exposed business interruption values (i.e. potential gross profit/earnings losses) taking into account interdependencies among the company and the supplying partners within its supply chain network. This approach can provide insurers and reinsurers with the required financial metrics to better address these risks. In this paper, after defining the adapted stochastic fully decomposed supply chain network (FDSN), we propose a new methodology to model the production rate potential at each site of production as a stochastic process via a recursive procedure. Finally, we consider the HAZUS Earthquake Model (HAZUS-EM) to estimate downtime and to quantify the impact of business interruption. Business interruption is propagated through the FDSN given an interruption in production in the supply chain network.