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Understanding Seismic Risk Assessments

The Basics of Seismic Risk Assessments and Probable Maximum Loss

Seismic Risks Assessments are used by property owners, tenants, investors, lenders and others to understand and manage earthquake-related risks. Site stability, building stability, and building damageability must be considered during the risk assessment, though evaluations of the damageability of building contents and business interruption can also be completed.

Who needs a Seismic Risk Assessment?

For the most part, this assessment is conducted in areas that have greater potential for damaging earthquakes, such as seismic zones 3 and 4 on the UBC Seismic Zone Map. However, some lenders may require Seismic Risk Assessments in other zones. Freddie Mac and Fannie Mae, for example, require an evaluation of seismic risks for properties based on thresholds for “peak ground acceleration,” a metric available on the United States Geologic Survey (USGS) website.  

Seismic Risk Standards

The ASTM E2026-16a Standard Guide for Seismic Risk Assessment of Buildings, published by ASTM International, defines common terminology and levels of assessment which allows clients and consultants to effectively communicate objectives and scopes of work. As a Guide, E2026 provides a discussion of approaches to seismic risk assessment, but does not identify or recommend a specific procedure for the work.

ASTM E2557 Practice for Probable Maximum Loss/Seismic Risk Assessments incorporates elements of E2026 to describe a more specific process for the evaluation of the earthquake damageability. The practice requires PML reports to include specific elements, but still allows the client to customize the assessment to reflect their unique risk appetite.

Probable Maximum Loss (PML)

Seismic Risk Assessment is sometimes referred to as an assessment of “Probable Maximum Loss”, though the terms are not entirely interchangeable. While there is no single accepted definition of the term Probable Maximum Loss (PML) is an estimate of the extent of damage to buildings in the event of anticipated ground shaking, and is expressed as a percentage of construction costs. A building with a PML of 20% which cost $10,000,000 to build is anticipated to experience $2,000,000 in repairs. PML reports can be used to screen for properties at increased risk of significant seismic damage, or can be incorporated into more complex assessments of seismic risks.

Per ASTM E2557-16a, PML may be defined differently depending upon the risk tolerance of the client. Two common definitions are the Scenario Expected Loss (SEL) and the Scenario Upper Limit (SUL). Both definitions rely upon probability variables for ground shaking as well as extent of building damage. 

Ground shaking – Ground shaking, also called Peak Ground Acceleration, or PGA, may be estimated for a specific earthquake or for the ground shaking anticipated over some period of time. Based on the size and frequency of historical earthquakes, ground shaking estimates can vary depending on the client needs. Most assessments consider ground shaking with a 475-year return period (10% probability of exceedance in 50 years), though other periods can be used. Shorter return periods will result in lower estimates of peak ground acceleration.

Extent of Damage – Damages estimates can be based upon statistical analysis of historical earthquakes or engineering estimates of damage at various levels of ground shaking. PML reports typically include estimates of both the Scenario Expected Loss (SEL) and Scenario Upper Loss (SUL).  Scenario Expected Loss is an estimate of the median level of damage, while Scenario Upper Loss provides an estimate of losses that are unlikely to be exceeded.

As statistical estimates, it is important to realize that the estimate of PML is not a guarantee of building performance. Greater damage could be incurred as a result of higher ground shaking, or damages outside the statistical limits of the estimate.

PML assessments can be performed at various levels as defined by ASTM E2026, or can be customized to address specific concerns and risk tolerance. Level 0 assessments are typically used to screen for specific risks, whiles Level 1, Level 2 and Level 3 assessments provide increasingly detailed review, study and design evaluation.

After a Seismic Risk Assessment

If the Seismic Risk Assessment identifies significant risk, property owners may choose to (or, depending on local ordinances, be required to) retrofit the property for earthquake resilience. In this case, a structural engineer will be needed to design a structural retrofit system which addresses deficiencies in how the structure responds to a quake. The design and extent of the retrofit will depend on many factors, including local building standards and codes, engineering constraints and the property owner’s objectives.