AIR expands risk planning to supply chain

   AIR Worldwide, a Boston-based provider of risk modeling software and consulting services, has extended its Catastrophe Risk Engineering (CRE) service to quantify, mitigate, and manage risks associated catastrophes in supply chain networks.
   AIR’s service aims to help managers assess and reduce risks from hurricanes, earthquakes, floods, tornadoes, and tsunamis. The company said this covers physical damage as well as secondary business interruption and losses across the entire supply chain when one area is affected.
   Akshay Gupta, director of AIR’s CRE practice, said “while the catastrophe risk to supply chain networks is quite complex, it can be effectively quantified. Once completed, the work involved to quantify this risk can also help expand risk assessment to other non-catastrophe perils.”
   AIR looks at the supply chain as a series of operational points that are linked based on function and revenue relationships, but feels that traditional risk management does not successfully note these relationships.
   “The existing method of assessing supply chain catastrophe risk is based on worst-case scenarios, establishing either 0 percent or 100 percent disruption one node at a time and propagating the impact through the entire the supply chain,” Gupta said. “It does not include the likelihood or frequency of shutdown, nor does it consider the partial shutdown of a single node or the simultaneous disruption of multiple nodes. This traditional approach can now be improved to provide a realistic and comprehensive assessment of the supply chain’s catastrophe risk exposure.”
   One major focus of CRE is planning based on disruptions in various nodes around the supply chain and how these disruptions ripple back and forth among other nodes. The company said the upstream and downstream components must be monitored for the best reaction to disruption and the easiest identification of network vulnerabilities.
   AIR aims its CRE solutions at risk managers and brokers for assessment, mitigation, and emergency response planning, as well as making decisions about insurance coverage.