This tool serves to quantify the overall financial implications associated with incidents that exceed typical human capabilities to manage or prevent. This involves analyzing a range of direct and indirect expenses arising from events such as large-scale disasters or extreme technological failures. For example, it could involve calculating the economic fallout from a catastrophic infrastructure collapse, incorporating factors like emergency response costs, infrastructure repair expenditures, and long-term productivity losses.
Calculating the economic burden of extraordinary events facilitates informed risk management and resource allocation. By providing a clear understanding of potential financial consequences, it enables stakeholders to prioritize preventative measures and develop effective mitigation strategies. Historically, informal assessments or ad-hoc calculations were used. This tool provides a more structured and comprehensive approach, which leads to more accurate predictions and improved decision-making.
