Capabilities |Optimal Design, Mitigation, and Benefit-Cost Analysis

The end use of any wind hazard risk analysis is often best summarized in terms of the decision making objectives of the user. For wind hazard issues, these decisions may be:

  • What criteria should govern the design of the structure or system?
  • Which houses or commercial buildings are appropriate for wind storm mitigation and retrofit?
  • What mitigation strategy is most appropriate for a particular building or class of buildings?
  •  Is upgrading or replacing existing components cost effective?
  • How many recovery teams are needed?
  • How much debris should be planned for removal?

ARA can address these questions using an integrated analysis of hazard, damage, risk, cost, and return on investment, coupled with optimization and decision analysis tools.

ARA has performed these analyses for many customers and wind hazard types. Since our physically-based modeling approach identifies the vulnerabilities of a building (or building class), we are able to identify the building components that contribute most to the damage and losses. We then evaluate alternative designs (for new structures) or mitigation strategies (for existing structures) and quantify the reduction in losses (benefits) that result for each case. We consider the initial investment cost, interest rate, maintenance cost over time, annual savings in reduced losses, insurance credits, and salvage costs can be considered for each option. We quantifiy net present worth and other economic values and compare to determine the strategy that produces the best return. The following series of figures provide examples of mitigation/retrofit assessments performed using ARA's software tools to support the decision making process.

Mitigation Decision Tree
(a) Example Mitigation Decision Tree for a Residential Structure

Probable Maximum Loss (PML): Total Loss vs. Exceedance Probability
(b) Probable Maximum Loss (PML): Total Loss vs. Exceedance Probability

Average Annual Insurance Loss vs. Deductible
(c) Average Annual Insurance Loss vs. Deductible

Expected Rates of Return for Various Mitigation Options
(d) Expected Rates of Return for Various Mitigation Options

ARA's software tools perform mitigation/retrofit assessments of buildings. Each mitigation strategy includes a separate damage and loss assessment and quantifies investment returns.

ARA produces these types of analyses for government agencies, building owners, and insurers. For example, the insurer can use similar results to guide such things as the selection of optimal premium credit strategies, underwriting strategies, or reinsurance coverage scenarios. The property owner can use the results for selecting the optimum available deductible or assessing the rates of return provided by various wind resistance upgrades to the building.

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