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Supply Chain Risk Simulation (SCRS)
The manufacturing and process industries have seen significant changes in both technology and management of the extended supply chain over the past 15 years. These changes have been fueled by just-in-time inventory management practices, strategic market planning, increased pressure from customers for improved services and products, and desires for continuing to remove inefficiency from the supply and distribution systems throughout the world. These changes have actually increased risk to business continuity programs from large consequence, low frequency events that can significantly disrupt procurement and delivery of critical parts and components throughout a supply chain network, which until recently, could not be effectively measured.
Traditional risk transfer mechanisms for business interruption and continuity have not kept pace with the increasing technological and complex changes being imparted to manufacturing and distribution systems worldwide, and are inadequate in effectively predicting the expected loss and interruption to revenue streams from these catastrophic events. In many market segments, business interruption coverage can be extremely expensive, difficult to obtain adequate limits, or includes significant exclusions due to the difficulty in measuring the expected loss and pricing the requested cover.
ABS Consulting has revolutionized the risk assessment and risk financing of business continuity exposures through a combination of EQECAT's robust probabilistic natural and man-made hazard models, with a state-of-the-art simulation software package which enables ABS Consulting consultants to accurately "model" a client's supply chain network, including owned assets, contingent suppliers, and critical infrastructure. The supply chain simulation software supports a significant level of detail of a complete manufacturing, distribution and supplier network, down to individual machinery and production lines, transportation networks, critical support and infrastructure systems such as rail, road, power, communications, etc. The SCRS also supports the detailed modeling of redundancies built into the system, as well as risk management programs that are designed to respond when disruptions occur.
The result of this effort is a distribution of the potential and expected disruption for a wide array of "events" from EQECAT's stochastic databases, quantifying the impact in financial terms of revenue impact, earnings per share, etc. on a daily, monthly or annual basis.
For more information, contact:
Kenneth A. Travers
SVP, ABS Consulting/EQECAT
1-302-239-1145 | ktravers@eqecat.com |
