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- Title
An Insurance Model for Risk Management of Process Facilities.
- Authors
Hashemi, Seyed Javad; Khan, Faisal; Ahmed, Salim
- 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.
- Subjects
COPULA functions; ACTUARIAL risk; RISK management in energy industries; ENERGY industries; INSURANCE premiums; RISK assessment
- Publication
Risk Analysis: An International Journal, 2019, Vol 39, Issue 3, p713
- ISSN
0272-4332
- Publication type
Article
- DOI
10.1111/risa.13179