Statistical analysis of risk, failure, and extreme event propagation in the airline industry using multi-level networks

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The goal of this project is to build a mathematical model for the spread of risk due to extreme events on multi-level networks and use advanced mathematical tools such as extreme value theory, modern results of mathematical statistics, and network theory, to analyse the model and compare the quantitative outcomes to real data. In particular, we will study this in the setting of the airline industry where failure of an electronic or mechanical component of an aircraft has an impact at the level of the component supply network, the airline network, and the airlines' insurer network. In the airline industry, each airline forms relationships with component manufacturers and insurers.The key goals of the project are to estimate the probability that an extreme event on one level of the network has significant consequences on another level and to model the costs of such extreme events for the different actors in the various layers of the network. Of particular interest is the estimation of the probability of failure of a critical component in an aircraft and the frequency with which such a failure results in a catastrophic event for an airline and ultimately in an extreme loss for insurers.