Andy-Kao-AIR Worldwide speaks Andy Kao, Director of Catastrophe Risk Engineering at AIR Worldwide, during the 2015 RIMS Conference New Orleans about modeling visible and invisible supply chain risk, and other model updates from AIR.

According to Mr. Kao, corporations regularly evaluate their supply chain to determine where they spend to most money. This is considered their “visible supply chain.” Using risk modeling, Risk Managers subject their visible supply chain to various scenarios to assess risk. Unfortunately, Mr. Kao says there is a lot more to the supply chain than can actually be seen, and ”that is what we call the ‘invisible supply chain’.”

To give Risk Managers full understanding of their Supply Chain Exposure, Mr. Kao says AIR’s “built a framework that establishes the hierarchy of industries, a network of trade relationships …and also…a global supplier exposure database… to provide probabilistic assessments” of different types of possible disruptions, potential frequency, severity as well as black swan-type events.

In addition, Mr. Kao says AIR just announced the “first ever inland flood model for the United States.” He says it is the first of its kind “for both on-plane and off-plane flood risk assessments and quantification of flood defenses.  In the U.S. AIR’s Hurricane model has been updated and now includes a new storm surge model. AIR is also releasing a tropical cyclone model, severe thunderstorm model, and a winter storm model for Canada. For Latin America, an updated Earthquake model and a flood Hazard map for Brazil is planned, as is expansion of its European Inland Flood Model to other countries besides Germany.

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