Extreme Risk Analysis of Interdependent Economic and Infrastructure Sectors
- 1 August 2007
- journal article
- research article
- Published by Wiley in Risk Analysis
- Vol. 27 (4), 1053-1064
- https://doi.org/10.1111/j.1539-6924.2007.00943.x
Abstract
Willful attacks or natural disasters pose extreme risks to sectors of the economy. An extreme-event analysis extension is proposed for the Inoperability Input-Output Model (IIM) and the Dynamic IIM (DIIM), which are analytical methodologies for assessing the propagated consequences of initial disruptions to a set of sectors. The article discusses two major risk categories that the economy typically experiences following extreme events: (i) significant changes in consumption patterns due to lingering public fear and (ii) adjustments to the production outputs of the interdependent economic sectors that are necessary to match prevailing consumption levels during the recovery period. Probability distributions associated with changes in the consumption of directly affected sectors are generated based on trends, forecasts, and expert evidence to assess the expected losses of the economy. Analytical formulations are derived to quantify the extreme risks associated with a set of initially affected sectors. In addition, Monte Carlo simulation is used to handle the more complex calculations required for a larger set of sectors and general types of probability distributions. A two-sector example is provided at the end of the article to illustrate the proposed extreme risk model formulations.Keywords
This publication has 17 references indexed in Scilit:
- Systemic Valuation of Strategic Preparedness Through Application of the Inoperability Input‐Output Model with Lessons Learned from Hurricane KatrinaRisk Analysis, 2007
- Managing the risk of terrorism to interdependent infrastructure systems through the dynamic inoperability input–output modelSystems Engineering, 2006
- Modeling the Demand Reduction Input‐Output (I‐O) Inoperability Due to Terrorism of Interconnected Infrastructures*Risk Analysis, 2004
- “Key” sectors in final energy consumption: an input–output application to the Spanish caseEnergy Policy, 2003
- The role of the four electric power sectors in the Korean national economy: an input–output analysisEnergy Policy, 2003
- Environmental impact assessment including indirect effects—a case study using input–output analysisEnvironmental Impact Assessment Review, 2003
- Leontief-Based Model of Risk in Complex Interconnected InfrastructuresJournal of Infrastructure Systems, 2001
- Total waste-load control and allocation based on input–output analysis for Shenzhen, South ChinaJournal of Environmental Management, 2001
- The Regional Economic Impact of an Earthquake: Direct and Indirect Effects of Electricity Lifeline DisruptionsJournal of Regional Science, 1997
- Input-Output EconomicsScientific American, 1951