eCite Digital Repository

Probabilistic modeling of business interruption and reputational losses for process facilities


Hashemi, SJ and Ahmed, S and Khan, FI, Probabilistic modeling of business interruption and reputational losses for process facilities, Process Safety Progress, 34, (4) pp. 373-382. ISSN 1066-8527 (2015) [Refereed Article]

Copyright Statement

Copyright 2015 American Institute of Chemical Engineers

DOI: doi:10.1002/prs.11753


This article presents probabilistic models to estimate business losses due to abnormal situations in process facilities. The main elements of business loss are identified as business interruption loss and reputational loss. The business interruption insurance approach is used to model business interruption loss. The subelements of business interruption loss are modeled based on expert knowledge using Program Evaluation Review Technique, which are then integrated using the Monte Carlo simulation approach. The reputational loss is considered as Weibull distributed, and the parameters are estimated by applying a scenario-based approach. Copula functions are then used to develop the distribution of the aggregate loss, considering the correlation between business interruption and reputational losses. The application of the loss models is demonstrated using a distillation column case study. The models presented here provide a mechanism to monitor process facility's business performance, with associated uncertainties, and to make swift operational and safety decisions. This will help to improve process facilities safety performance and optimal allocation of resources where they are needed the most.

Item Details

Item Type:Refereed Article
Keywords:copula, distillation column, loss aggregation, loss modeling, distillation, intelligent systems, Monte Carlo methods, safety engineering, business performance, copula, loss model, optimal allocation, probabilistic modeling, probabilistic models
Research Division:Engineering
Research Group:Chemical engineering
Research Field:Chemical engineering design
Objective Division:Economic Framework
Objective Group:Microeconomics
Objective Field:Industry costs and structure
UTAS Author:Khan, FI (Professor Faisal Khan)
ID Code:120441
Year Published:2015
Web of Science® Times Cited:8
Deposited By:NC Maritime Engineering and Hydrodynamics
Deposited On:2017-08-24
Last Modified:2017-11-03

Repository Staff Only: item control page