Probabilistic modeling of business interruption and reputational losses for process facilities

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.