Prediction of Power Plant Exposure to Economic Losses Through a Property Risk Assessment Methodology

In this paper, a procedure for Risk Assessment, which makes use of two risk indices (PML - Probable Maximum Loss and MFL - Maximum Foreseeable Loss) is applied to power plants to evaluate potential economic losses due to risk exposure for two different loss scenarios (probable and worst-case). The paper is mainly focused on Property Insurance aspects, though Boiler and Machinery Insurance and business interruption are also addressed. First, the procedure is applied to provide a prediction of probable and maximum loss as a function of power output. The results allow an estimate of whether the adoption of risk assessment procedures and devices allows an actual payback for plant owners. Second, the economic loss predicted through the risk assessment procedure is compared against real power plant loss values, taken from published data.