Measuring Business Interruption Losses and Other Commercial Damages, 3rd Edition

CHAPTER 3Economic Analysis in Business Interruption Loss Analysis

As noted in Chapter 2, several different forms of economic analysis may enter into a business interruption loss analysis. In the top‐down framework presented in that chapter, a broad‐based macroeconomic analysis is used to assess the overall economic environment. Following that, the focus is narrowed to the regional level if the business at issue is a regional one. The focus then gets progressively narrowed further, where the firm‐specific analysis is conducted. However, this chapter starts the process by developing the macroeconomic and regional economic tools that are necessary for a thorough business interruption loss analysis. The analytical process for macroeconomic analysis and regional analysis is similar, although some of the data used are different. The macroeconomic and regional economic analysis then sets the stage for industry analysis, covered in Chapter 4.

Economic Fluctuations and the Volume of Litigation

Many attorneys and professionals working in the litigation support field believe that the litigation business is somewhat insulated from economic fluctuations. New research has shown that this is not the case.¹ The extent to which the volume of lawsuits follows the business cycle depends on the type of case. As one would surmise, bankruptcy litigation exhibits clear variation. However, other types of lawsuits are also affected by the variation in the economy. Interestingly, specific types of ...