Multihazard Risk Assessment and Cost–Benefit Analysis of a Bridge–Roadway–Levee System

Abstract

This paper explores financial aspects of selecting retrofit strategies for an interdependent civil infrastructure system subjected to multiple hazards. A hypothetical bridge–roadway–levee system, subjected to seismic and high-water hazards, is analyzed and retrofit strategies for the levee and bridges of the system are evaluated in terms of risk metrics commonly used in the field of financial engineering for portfolio optimization. The risk metrics include the average annual losses, value at risk or probable maximum losses, conditional value at risk, and worst-case losses. The analysis and evaluation procedures for the system rely on the performance-based earthquake engineering framework, but utilize an event-based approach in a multihazard context and consider both structural and downtime losses. It is shown that an optimal retrofit strategy depends on the risk metric(s) being used for risk evaluation. It is also quantitatively argued that various stakeholders, including the owners, policy makers, and insurance companies, may perceive risks differently, use different metrics for risk evaluation, and come up with different retrofit strategies for risk mitigation of the same system.