Loss scenario analysis and loss aggregation for process facilities

This study presents an overall loss modelling methodology for process facilities. The methodology comprises loss scenario identification and aggregation of losses clue to process deviations. The identification of loss scenarios and determination of the time periods at which a process experiences each scenario are described first. Then, the application of the copula functions and their integration with the Monte Carlo (MC) approach are proposed to address the existing challenge of loss aggregation for multiple loss scenarios. The proposed loss aggregation provides a flexible and realistic approach to construct joint multivariate distribution of the losses by considering their interdependence. The sensitivity of the model to the choice of correlation parameters is investigated. The results serve as a reminder to risk analysts about the significance of choosing an appropriate loss aggregation model for risk analysis purposes. The application of the methodology is demonstrated using a distillation column case study. (C) 2015 Elsevier Ltd. All rights reserved.