Merrill Lynch is reviewing insurance cover and disaster recovery plans for its Japanese operations after conducting a seismic hazard risk analysis which estimated prolonged outages in the event of a major earthquake in Japan.
The analysis was performed for Merrill Lynch Japan by OYO RMS using its RMS RiskLink earthquake loss model for Japan and its CoNet business outage software.
Craig Van Anne, president of OYO RMS, comments: "This analysis was a joint effort with Merrill Lynch management to create a computer map of MLJ's business operations. Based on specific evaluation of critical facilities, we were able to provide a business unit level estimate of financial loss from lost sales, and an informed basis for disaster planning against loss of functionality."
The CoNet model estimates prolonged outage due to upstream operational dependencies on corporate facilities, vendors, intermediate suppliers, etc. The CoNet analysis is based on RiskLink estimates of physical damage to individual facilities throughout Japan that form the three operating business units of the MLJ network.
"OYO RMS results provide MLJ a comprehensive understanding of how our system will respond to a major earthquake", says Terry Winder, Merrill Lynch Asia treasurer. "We decided at the beginning of the year to undertake this study to gain a better understanding of the risks we face. Our expansion in Japan means we now occupy more buildings and our computer network has become more complex."
He says the results will be used to refine disaster response plans and ensure appropriate business interruption insurance coverage.