A SHOCK ABSORPTION INDEX FOR INOPERABILITY INPUT-OUTPUT MODELS

Raymond R. Tan, Kathleen B. Aviso, Michael Angelo B. Promentilla, Francesca Dianne B. Solis, Krista Danielle Yu and Joost R. Santos

Economic Systems Research, 2015, vol. 27, issue 1, 43-59

Abstract: Recent disasters have underscored the importance of enhancing resilience in economic systems. In this work, we propose a novel shock absorption index , which provides a measure of the ability of an economic system to tolerate disruptions. It is assumed that there are externally defined initial levels of system failure or disruption, as well as maximum allowable levels of inoperability for each sector. The shock absorption index is defined as the largest fraction of the anticipated initial disruption that can be absorbed by the predefined robustness limits. It provides an overall measure of the robustness of an economic system towards a disruptive event, which is driven by both the economic structure and the individual robustness of different sectors. The results of two case studies illustrate policy-making insights in identifying and prioritizing risk management strategies for critical systems.

Date: 2015
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DOI: 10.1080/09535314.2014.922462

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