An Insurance Model for Risk Management of Process Facilities

Risk Analysis : an Official Publication of the Society for Risk Analysis
Seyed Javad HashemiSalim Ahmed

Abstract

Most existing risk management models for process industries do not consider the effect of insurance coverage, which results in an overestimation of overall risk. A model is presented in this article to study the effect of insurance coverage of health, safety, environmental, and business risks. The effect of insurance recovery is modeled through the application of adjustment factors by considering the stochastic factors affecting insurance recovery. The insurance contract's conditions, deductibles, and policy limits are considered in developing the insurance recovery adjustment factors. Copula functions and Monte Carlo simulations are used to develop the distribution of the aggregate loss by considering the dependence among loss classes. A case study is used to demonstrate both the practical application of the proposed insurance model to improve management decisions, and the mitigating effect of insurance to minimize the residual risk.

References

Mar 2, 2006·Risk Analysis : an Official Publication of the Society for Risk Analysis·Andreas Tsanakas, Evangelia Desli
Apr 19, 2008·Risk Analysis : an Official Publication of the Society for Risk Analysis·K Goda, H P Hong
May 12, 2009·Journal of Hazardous Materials·N S Arunraj, J Maiti
Aug 28, 2010·Science·Gary E Machlis, Marcia K McNutt
Sep 3, 2010·Risk Analysis : an Official Publication of the Society for Risk Analysis·Haitao YinHoward Kunreuther
Mar 6, 2012·Risk Analysis : an Official Publication of the Society for Risk Analysis·Elisabeth Paté-Cornell
Mar 8, 2012·Risk Analysis : an Official Publication of the Society for Risk Analysis·P BubeckJ C J H Aerts
May 19, 2012·Risk Analysis : an Official Publication of the Society for Risk Analysis·Carol Alexander, José María Sarabia
Aug 12, 2016·Risk Analysis : an Official Publication of the Society for Risk Analysis·Jason Thistlethwaite

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