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A New Approach to Seismic Risk Analysis

US Resiliency Council standard institutes consistency, transparency

For CRE investors acquiring properties on the west coast, a seismic risk assessment is standard practice. In seismic zones three or four, the question is not whether a significant seismic event will occur, but when it will occur—so a clear understanding of your potential losses in such an event becomes a critical part of due diligence. However, due to industry wide inconsistencies in assessing and calculating earthquake risk, understanding your potential losses can be a tricky and sometimes costly undertaking.

Attempting to solve the PML inconsistency problem and further industry adoption of modern methods, a not-for-profit organization called the U.S. Resiliency Council (USRC) was formed in 2016 (among other things) with the goal of establishing consistency and transparency in seismic risk assessment rating systems and the PML process.

To read the entire article about seismic risk assessments and the implementation of the US Resiliency Council standard, click here.