Decentralized risk management for strategic preparedness of critical infrastructure through decomposition of the inoperability input–output model

Recent disasters and terrorist attacks have increased the demand on the US government in assuring the safety and reliability of the nation’s critical infrastructure. The response of the US Department of Homeland security, as set forth by the National Infrastructure Protection Plan (NIPP) is to decentralize much of the risk assessment and strategic decision-making processes to the owners and operators of the critical infrastructure. Although, this decentralization method has many advantages, it may provide a solution that is inferior to a comprehensive centralized approach. This manuscript develops a multi-objective strategic preparedness problem that is constrained by distinctive model features of an interdependent, regional socio-economic system. The model is a generalization of the nation’s critical infrastructure protection problem that focuses on commodity transaction between economic sectors. The strategic preparedness problem is solved by various decomposition methods, to illustrate the complexity of a decentralized risk management process of a system that is pregnant with interdependencies.The Inoperability Input–Output Model is core to the preparedness problem of this manuscript, and provides a rich database and modeling paradigm to support the study of regional interdependent economies. Derived from a Nobel Prize-winning W. Leontief economic model, and built on Bureau of Economic Analysis (BEA) data, the IIM is a quick, inexpensive, holistic method for estimating economic impacts and sector interdependencies. The IIM is useful as a part of a larger multi-objective decision model used in this paper to analyze the process of decentralized strategic preparedness. This paper develops a general ability to quantify system trade-offs between objectives of preparedness decisions, by embedding the IIM into a multi-objective risk management model for strategic preparedness.Through decomposition of the multi-objective strategic preparedness model constructed around the IIM, we analytically calculate the trade-offs between preparedness costs and economic resilience of regions from existing regional economic data, and provide insights into the decentralized risk management process.