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NAREIM DIALOGUES FALL 2017 7 INCREASING STRUCTURAL RESILIENCY AND ENHANCED RISK MANAGEMENT Are you carefully considering your property's risk of loss from high winds in hurricane and tropical storm areas, or damage due to wind-blown debris? The Wind Probable Maximum Loss estimating process is currently being standardized by my colleague Jane Powell and other industry experts on an ASTM International committee, a much-needed initiative to bring consistency to how institutional investors manage high wind risk. Wind loss estimates should properly incorporate factors beyond lateral wind forces, such as the exposure to wind- blown debris from nearby structures, or the ability of each corner of your building to withstand uplift. Are you familiar with the American Society for Civil Engineers updates to high risk wind zone maps? It's important to see how your property stacks up against updates to Uniform Building Code requirements in vulnerable states (such as Florida), many of which have updated their wind codes. Does your property have clip design or retrofit solutions where roof systems are tied into the foundation anchorage? For properties in earthquake zones, a thorough, non-invasive seismic risk screening and probable maximum loss 7 estimate per the new ASTM Practice is an essential starting point, but these statistical models are based on older data and are only useful for lowering risk, not eliminating it altogether. As an alternative to the probable maximum loss, you may also consider following protocols from engineering lead managers, like what would be designed and performed in American Society for Civil Engineering. Understanding your engineer's retrofit design experience and expertise specific to the building type, like a tilt-up industrial property, or an unreinforced masonry multifamily property, is key to executing a proper retrofit. Moreover, damage from storm surge and flooding, which can often be far more detrimental than initial winds, must also be a key consideration. Evaluating whether properties are in a flood zone, and the nature of the flood risk that it entails, is critical. Federal Emergency Management Agency flood zone base elevation maps 8 are a good start, but can be inaccurate by up to 30%, and are therefore often unreliable 9 . For example, 40-50% of Houstonians impacted by flooding after Hurricane Harvey technically lived outside of these putative high-risk flood zones. Land surveys by professional civil engineers can issue a much more accurate elevation certificate. These assessments provide a three-dimensional topographical correlation of your property relative to a flood elevation area, and the potential geotechnical issues that could arise due to flooding (landslides, subsidence, surficial soil erosion). 1 "Hurricanes Harvey and Irma may have caused up to $200 billion in damage, comparable to Katrina" ABC News, http://abcnews.go.com/US/hurri- canes-harvey-irma-cost-us-economy-290-billion/ story?id=49761970 2 "Fierce storms haven't slowed population growth along U.S. coastlines" PBS, http://www.pbs.org/ newshour/rundown/fierce-storms-havent-slowed- population-growth-along-u-s-coastlines/ 3 "How so many of the world's people live in so little of its space" Washington Post, https://www.washingtonpost.com/news/wonk/ wp/2015/09/03/how-so-many-of-the-worlds- people-live-in-so-little-of-its-space/?utm_ term=.22627bc17340 4 "Harvey hits mortgages as flood-stricken homeowners are unlikely to pay" CNBC, https://www.cnbc.com/2017/08/30/harvey-hits-mort- gages-as-flood-stricken-homeowners-are-unlikely- to-pay.html 5 "The Financial Effects of a Natural Disaster" Investopedia, http://www.investopedia.com/finan- cial-edge/0311/the-financial-effects-of-a-natural-di- saster.aspx 6 "Why commercial real estate investors are looking to resilience rather than yields" Cities Today, https://cities-today.com/industry/commercial-real-es- tate-investors-looking-resilience-rather-yields/ 7 "Probable Maximum Loss" Partner Engineering and Science, https://www.partneresi.com/services/build- ing-assessments/seismic-probable-maximum-loss 8 "Base Flood Elevation" FEMA, https://www.fema.gov/base-flood-elevation 9 "Why Are FEMA's Flood Maps So Horribly Flawed?" Slate, http://www.slate.com/articles/health_and_sci- ence/science/2017/09/here_s_why_fema_s_flood_ maps_are_so_terrible.html ©iStock.com/Gabiixs NAREIM DIALOGUES FALL 2017 7