Overview

The discussion focused on the ASTM Property Resilience Assessment (PRA) standard, which helps property owners, investors, and insurers manage climate-related risks. Developed by the American Society for Testing and Materials, the standard complements existing assessments like the Phase I environmental site assessment and Property Condition Assessment. It involves three stages: identifying natural hazards, evaluating risks, and proposing resilience measures. A concrete example highlighted a $10.5 million cost to protect against a Category Five storm surge compared to $250,000 for a Category One surge. The standard also emphasizes ongoing operational spending for effective resilience.

Transcript

Speaker 1
You know, you hear so much lately about natural disasters getting well more intense, yeah, climate change, storms, sea levels rising, you can feel pretty overwhelming, right? Especially if you’re thinking about, say, protecting property investments. It makes you wonder, Where do you even start?

Speaker 2
That’s a really common feeling. The risks, they are complex and they are significant, yeah, which is exactly why having some kind of structure a clear path to approach them is just so important.

Speaker 1
And that’s what we’re diving into today, isn’t it? We’re going to unpack this, this new standard, the ASTM property resilience assessment standard, e3, 429, 24, that’s the one think of this as maybe a shortcut for you listening, a way to quickly grasp how property owners, investors, lenders, insurers, how they’re getting a handle on these risks, including the climate change angle, and importantly, what they can actually do

Speaker 2
Exactly. It’s a robust framework if you’re looking to get up to speed quickly, but also thoroughly. This standard, it offers that it cuts through a lot of the noise, gives you a systematic way to assess and plan. Okay

Speaker 1
let’s get into it. So this ASTM standard, where did it come from? Who was behind it?

Speaker 2
Well, it came out of a lot of hard work by an ASTM committee. ASTM, that’s the American Society for Testing of materials. They developed these voluntary consensus standards, right? And a really key person involved in this standard was Albert J slapp. He’s the president of risk footprint, risk footprint, okay, I think I’ve heard of that. Yeah, probably Albert’s background is actually as an environmental attorney. His company coastal risk consulting, they developed this risk footprint technology, okay? It’s basically a sauce tool, you know, Software as a Service, provides these detailed assessments floods, natural hazards, extreme weather, climate impacts. It’s pretty comprehensive. It’s even gotten recognition from the UN actually, which says something about its credibility.

Speaker 1
So this standard isn’t just theory. It’s backed by, well, real tech and expertise. And you mentioned it fits with other standards.

Speaker 2
Yes, exactly. It’s meant to sort of complement things you might already be familiar with, like the phase I environmental site assessment, ASTM e1, 527, right for contamination, exactly. And the property condition assessment, the PCA, ASTM E, 2018 that looks at the physical condition. Okay, this new one, ASTM pra it focuses specifically on resilience to natural hazards, and it was officially published November 2024 so it’s very recent.

Speaker 1
Got it November 24 so we know the who and the when. Now, what does this property resilience assessment, this pra, actually involve? What are the steps? 

Speaker 2
Is’s built around three main stages, pretty logical flow, actually. Okay. Stage one is all about identifying the natural hazards, which ones are likely to affect a specific property. You know is flooding, wind, earthquakes, wildfires, what’s relevant based on where it is.

Speaker 1
Makes sense. Can’t plan if you don’t know the threat. What’s stage two?

Speaker 2
Stage Two takes those hazards you identified, and digs deeper. It evaluates the risks they pose, and crucially, it looks at the property’s current ability to prepare, adapt, withstand, and, importantly, recover.

Speaker 1
So it’s not just saying risk of flood. It’s understanding how bad the flood might be and how well the building, as it stands now, could handle

Speaker 2
it precisely. It’s about understanding the vulnerabilities in detail. Okay? And stage three. Stage three is where you identify potential resilience measures. Yeah, these are sort of conceptual ideas at this point, actions the owner could take to improve how the property performs during an event and speed up recovery afterwards, right? And a key thing here the PRA involves people actually going on site, engineers, architects, professionals who can assess the physical situation firsthand.

Speaker 1
That seems critical. You can’t just look at maps, right? You need eyes on the building itself Exactly. Now. Why go through all this if you’re an owner or investor, what’s the ultimate goal? The why?

Speaker 2
The main driver really is figuring out if investing in what they call resilient retrofits makes financial sense. These are the physical upgrades to handle those hazards. And the big question is always about the ROI, the return on investment.

Speaker 1
Roi always comes back to that. Yeah, so what kind of returns are we talking about potentially?

Speaker 2
Well, there are several angles. The most obvious is just preventing damage. Less damage means lower repair costs. That also means fewer business interruptions, which can be hugely expensive, especially for commercial properties.

Speaker 1
Yeah, downtime costs add up fast, definitely. Then there’s tenant satisfaction.

Speaker 2
A resilient building is more attractive might help retain tenants, and long term, these properties are likely to hold their value better. Okay, so the Insight is it’s not just about dodging disaster. It’s about maybe getting a competitive edge, managing risk better, potentially lowering long term costs,
right, avoiding damage, keeping the doors open, happy tenants, protecting value makes sense.

Speaker 1
Now, you also mentioned insurance. How does resilience play into that?

Speaker 2
Yeah, that’s a. Um, that’s an interesting piece, and it can be a bit complex. How? So, ideally, right? If you reduce your potential insured losses by making your building stronger, you’d hope to see your insurance premiums go down, like putting in sprinklers. Maybe exactly for internal risks like Leak Detection or sprinklers, that often does happen, you get premium credits, but for external hazards, like, say, storm surge.

Speaker 1
It’s not always as direct or consistent across all insurers, so building flood walls might not automatically get you cheaper insurance, not universally, no.

Speaker 2
But there are insurers thinking ahead, like FM Global, for instance, they have things like resilience credits. They might offer, say, a 5% credit if you proactively implement certain risk reducing retrofits. Ah, so some are incentivizing it. Some are and the key recommendation from the ASTM standard itself is to get your insurance agent and the insurance company involved early, like before you even finish stage three of the
PRA that sounds smart.

Speaker 1
Talk to them before you spend the money exactly

Speaker 2
so you understand what they need to see, they can tell you what kind of evidence base they’d require to actually consider adjusting your premiums, evidence based like what? Well, it could be things like third party verification that the retrofit was built correctly, certifications on materials, proper installation, maybe even field testing to show it works

Speaker 1
right, proving it’s not just there, but it’s effective

Speaker 2
precisely. And this often happens in the phase after the main pra risk footprint, for example. Calls this follow through Phase pra plus three. Pra plus three, yeah, think of it as the implementation and verification step. It’s where those conceptual ideas from Stage Three get built, documented with hard data may be tested that creates the evidence base, solid proof of effectiveness.

Speaker 1
Got it building the case backed by data. Yeah, okay, let’s make this more concrete. Stage three, yeah, what kind of measures are we talking about? And what about costs?

Speaker 2
You mentioned ROI,
right.Well, the specific measures and their costs really depend on the hazard and how much protection you’re aiming for? Makes sense. The source material had a good example, a condo building facing hurricane storm surge. To protect against a category one storm surge, the estimate was around $250,000 man, okay, but to protect against a Category Five surge, the cost jumped massively to something like $10.5 million

Speaker 1
Whoa, 250k versus over $10 million that’s, yeah, that’s a huge difference. Really shows the trade offs involved.

Speaker 2
It absolutely does. And to kind of drive home the potential benefit, the standard talks about doing a before and after analysis, so sticking with that condo example, imagine it has a garage and a lobby vulnerable to flooding. The analysis looked at putting in a hypothetical six foot flood barrier, a six foot wall, basically something like that. Yeah, this before and after view really helps quantify that ROI we talked about shows the dollars and cents. Okay, so what did it look like before the barrier? Well, for a FEMA, 100 year flood hitting the garage

Speaker 1
FEMA, that’s the Federal Emergency Management Agency, right? They’re flood maps correct.

Speaker 2
So for that FEMA 100 year flood in the garage, replacement value $4.5 million the estimated damage without the barrier was about $378,000 plus maybe 30 days of business interruption, ouch. Okay, and the lobby, for a Category five storm hitting the lobby, the damage estimate was lower, around $210,000 but the business interruption a staggering 450 days,

Speaker 1
400 years. That’s that’s over a year. The impact on revenue tenants huge, massive.

Speaker 2
So the after part of the analysis showed that the six foot barrier could potentially avoid pretty much all of that damage and interruption for the garage and the 100 year flood, and for the lobby in the cat five surge protects the contents too,

Speaker 1
so potentially saving hundreds of 1000s in damage and avoiding that massive downtime

Speaker 2
exactly Now it’s important to clarify a six foot barrier helps against that FEMA 100 year level, but it might not stop every possible storm surge modeled by NOAA for cat one through five hurricanes,

Speaker 1
NOAA being the National Oceanic and Atmospheric Administration, weather and oceans data,

Speaker 2
that’s them. So the barrier is a major improvement, but maybe not a silver bullet for absolutely any event imaginable.

Speaker 1
Still that before and after really drives home the value proposition.

Speaker 2
It really does. And that loops back to building that evidence base. We mentioned the ASTM pra process, and especially that pra plus three implementation and verification phase. It’s all about creating that documented proof showing your work kind of like that. Yeah, you’re not just saying you improved resilience. You have the data, the certifications, the test results to back it up, which is what you take back to the insurance exactly, and use for your own internal decisions too. It makes those conversations much more concrete. Okay? And there’s one last crucial point the source makes. Resilience isn’t just a one off capital expense. Install the barrier and you’re done. No? It’s an ongoing process. It needs continuous. Operational spending, things like staff training, regular drills, making sure your emergency plans are actually implemented correctly when needed.

Speaker 1
That makes total sense. The best barrier in the world doesn’t help if no one knows how to deploy it or when precisely. Okay, so let’s pull this all together for someone listening, trying to get their head around this new standard. What’s the main takeaway?

Speaker 2
I’d say the key thing is that this ASTM property resilience assessment standard provides a really valuable, structured way to understand and deal with natural hazard risks for commercial property, a solid framework going through those three stages helps owners, investors, whoever, get a much clearer picture of their specific vulnerabilities. It helps identify potential fixes that actually make financial sense that ROI piece, and ultimately, it aims for better outcomes, less damage, less downtime, and hopefully a better position.

Speaker 1
When talking about insurance, it really
feels like this standardized approach could significantly change how the real estate world handles these growing risks

Speaker 2
Which leads to the question for you listening, how will this standardized assessment change things? The future of property investment insurance, especially with climate risks becoming more obvious? Definitely something to think about. Maybe what proactive steps you could consider.

Speaker 1
And if you do want to learn more, or if you have sales questions, you can contact risk footprint directly. The email is customer service at riskfoot trent.com Okay, or call them at 844-732-7473, and their website has a lot of info too, www.riskfoot print.com Great. And Albert slap, the expert we mentioned earlier, he’s very active on LinkedIn. If you want deeper insights, we’ll drop the specific links in the show notes. There about six Recent Posts covering this.

Speaker 2
Yeah, definitely check those out. Also keep an eye out for an article Albert has coming in the EDA journal. That’s the environmental Bankers Association. It’ll be in the winter 2025 issue, focusing on flood risk data in commercial loans and how this pra standard fits in. Okay, good heads up. And one more look for his piece in the EBA summer 2025 journal. It’s based on a Forbes article titled something like the need for climate risk disclosures, a case study of physical risk of two REITs, EQr and R. So clearly there’s a lot more discussion happening around this sounds like

Speaker 1
a really important topic, and the standard seems like a big step forward in providing some much needed structure.