Quantifying Seismic Risk Exposure for a Global Pharmaceutical Company
Read how ABS Group helped a major pharmaceutical company quantify and manage their seismic risk exposure at key facilities.
Identify the seismic hazard level at key client facilities
Quantify seismic risk exposure in terms of financial risk and asset vulnerabilities
Provide recommendations to address all identified vulnerabilities, including site structures, equipment and inventory
Produce detailed engineering designs and calculations to provide a cost-effective and customized Risk Reduction Program
As a result of a major internal risk management review, a global pharmaceutical company identified the need for a better understanding of its seismic risk exposure across its global portfolio to confirm that current insurance levels were appropriate, efficient and fit-for-purpose.
ABS Group was selected by the client as a comprehensive risk management services provider for hazard identification, vulnerability quantification and mitigation assessment and design. Our expert Natural Hazards Risk Management and engineering services provided the client with high-quality independent, unbundled advice that is continually available service regardless of the client’s insurance carrier.
The work completed by our engineers helped the client to not only quantify the seismic risk exposure across their portfolio but also allowed them to plan to reduce this exposure where it was undesirably high and did not align with its risk appetite. In short, the client was able to visualize the necessary works needed in the near future by utilizing the Seismic Risk Reduction Program we tailored for its specific needs.
- Understand and quantify seismic hazard exposure across the global portfolio
- Increase awareness of business and safety-critical vulnerabilities and provide recommendations to address identified vulnerabilities
- Understand the potential Probable Maximum Loss (PML) and Business Interruption (BI) impacts at each location
- Develop the capacity to proactively manage seismic risk moving forward
Seismic Hazard Quantification
The client provided the locations of their portfolio of facilities. For each of these facilities, we performed a detailed Seismic Hazard Assessment (SHA) to determine the local seismic risk, assessing against the 1 in 100 year, 1 in 250 year and 1 in 500 year return period seismic events. Our experienced risk and engineering professionals performed the SHA in line with international practices and local building code requirements, factoring-in site specific functions including geotechnical parameters for specific hazard quantification.
Our client received a full appraisal of the regional and local seismicity in the vicinity of each facility including an event catalog, local fault appraisals, tectonic processes and a historical review of the applicable national seismic building code. The latter enabled the seismic basis of design for existing assets to be appraised against the prevailing code requirements.
On-Site Audit and Identification of Vulnerabilities
An on-site audit, which facilitated the identification of vulnerabilities for the site structures, equipment, utility systems and inventory (raw material and finished product) was performed against the determined site-specific seismic hazard at each location. Audit meetings were held with site personnel to discuss operations and enable a full understanding of each facility and its dependencies, both internal and external. To establish a more complete risk picture for the facility, an appraisal of any existing mitigation measures, emergency response and business continuity plans was also undertaken.
To support a sustained program of risk management and vulnerability reduction, our assessment team applied bespoke survey-recording tablet applications which provided enhanced vulnerability cataloging and data recording. Following the audits, this data was entered into the natural hazard scenarios and in-house loss models to establish a baseline for the facility with which to measure and track future risk reductions via a tailored risk reduction program.
Risk Reduction Program
The data collected during the site audit was crucial to the project output. It supported the client's development and implementation of a series of practical recommendations that were structured to gain the greatest vulnerability and financial impact reductions. We then developed target completion dates, responsibility assignments and cost estimations to provide the client a customized, cost-effective mitigation plan to assist with the reduction of risk exposure at the facilities.
PML and MFL Estimates
Using facility-specific data, a Comprehensive Loss Model for each facility was constructed. The output of these models were the Probable Maximum Loss (PML) and Maximum Foreseeable Loss (MFL) estimates, built-up utilizing the Property Damage and Business Interruption components. This output allowed the client to enhance and improve its decision-making associated with insurance placement.
Where requested, we also provided the client with detailed engineering design solutions to address the recommendations made at key locations. This allowed the client to systematically reduce vulnerability and increase resilience at select facilities. The specific outputs from the detailed design stage, included:
- Detailed design calculations
- Construction drawings
- Specifications and method statements
Our solution provided the client with a greater understanding and appreciation of the seismic vulnerabilities across its portfolio. This allowed them to ensure that their insurance programs were fully optimized and effective for their needs. Our solution also enabled the client, in the medium to long term, to manage the levels of vulnerability through the implementation of the targeted mitigation plans. These plans helped to increase the resiliency of business operations with respect to seismic hazard exposures and gave assurances to stakeholders that such exposures were properly identified and managed.