Profitability Analysis for Assessing the Optimal Seismic Retrofit Strategy of Industrial Productive Processes with Business-Interruption Consequences

Abstract

Seismic damage affecting industrial-process components can cause severe disruption, leading to not-negligible profit reduction associated with business interruption. Hence, the implementation of a proper seismic risk mitigation strategy is often required, accounting for financial issues as well. This study presents a novel probabilistic seismic risk assessment framework able to quantify business-interruption losses on the basis of a company’s balance-sheet data. The framework contains a financial module that uses a profitability index (PI) for identifying the most profitable seismic retrofit strategy to be implemented, given a reference time window and available budget. Application of the framework to a typical Italian cheese factory is also illustrated. Results show how business-interruption losses are comparable with direct costs for the rehabilitation of seismically damaged components. Additionally, it is demonstrated that PI can be considered a suitable financial indicator, and evaluating the contemporary benefit has a primary importance when a retrofit strategy is applied to more components.