Optimal Strategy for Business Recovery after Earthquakes

Abstract

A methodology for choosing the best recovery strategy is presented for a company that owns multiple income-producing properties damaged in an earthquake. The basic idea is to choose recovery actions that maximize the net asset value of the properties owned by the company. This methodology helps to address the question of whether each property should be repaired or demolished. It allows the optimal expenditure rate and optimal time for repair or demolition to be determined. Furthermore, when the total cost of repairs is subject to a budget constraint, the methodology shows whether each property should be repaired immediately, delayed or never repaired.