NU Online News Service, April 23, 1:00 p.m. EDT
ORLANDO, FLA.–Catastrophe modeling firm AIR Worldwide Corporation announced here earlier this week it has added a new service to the modeling of industrial and energy facilities, including offshore platforms and networks to its system.
Boston-based AIR said its catastrophe risk engineering practice (CRE) will provide corporate risk managers and insurers with detailed structural evaluations and earthquake and wind engineering services, coupled with risk modeling for pre-disaster planning, risk mitigation, post-event damage assessment and repair development.
Akshay Gupta, principal engineer and director of the catastrophe risk engineering practice at AIR Worldwide said in an interview, "In building models, there is a lot of detailed engineering science. We figured we were missing one piece of the insurance food chain, which was looking at the corporate risk."
He noted, "If you look at the larger risks, the highly protected risks–the industrial facilities, the offshore, the energy sector, or large commercials–they don't fit into molds. Each one is individual."
Mr. Gupta explained that while physical damage can be unique, the critical piece is business interruption from physical damage. Even though a building may not be heavily damaged, if a company's systems are down, its business is down.
AIR, he said, decided to target these sectors' highly protected risks, and then blended its science–hazard modeling and network modeling–with very detailed engineering.
"It's like taking a structural engineering firm and a risk modeling firm and blending the two," Mr. Gupta said.
AIR said that recent earthquakes and hurricanes–such as the 2007 Niigata Chuetsu-Oki Earthquake and Hurricanes Katrina, Rita, Gustav, and Ike–have resulted in significant property loss and downtime to numerous industrial and offshore facilities globally.
"In today's economic environment, risk managers are under increasing pressure to make informed decisions regarding insurance purchase, retrofit investments, tradeoffs between insurance, and other operational procedures," AIR said in a statement.
Accurate evaluation of seismic or hurricane risk to industrial and offshore facilities is complex, because these facilities exhibit a variety of distinct workings, AIR said. These include structures (buildings and platforms), machinery, equipment, transmission systems, transportation assets, and contents.
The unique characteristics of the components at a facility–in terms of physical condition, design criteria, and spatial location within the facility–can result in seemingly similar facilities exhibiting markedly different response to catastrophes in terms of physical damage and downtime.
Involved process networks such as offshore assets connecting to undersea pipelines or tankers connecting to onshore facilities further complicate the risk analysis, according to AIR.
The organization said its CRE practice employs a comprehensive engineering, scientific, and network approach for assessing catastrophe risk and evaluating recommendations of risk mitigation strategies for such facilities. This approach is transparent, both in the process and results for the benefit of owners, insurance brokers, and insurers.
AIR's CRE services are being used for risk assessment, mitigation and decision making by corporations "with assets ranging from single buildings to some of the largest industrial complexes in the world," Mr. Gupta said.
He added that site-specific, engineering-based risk evaluations provide reliable and defensible loss estimates for facilities. "They also "facilitate decisions regarding insurance coverage, mitigation planning, emergency response planning, and determination of shutdown criteria, among others," he said.
AIR is a member of the ISO family of companies.
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