Introduction

Resilience planning for buildings and infrastructure increasingly relies on quantitative risk assessments to guide investment in mitigation and adaptation. Value-at-Risk (VAR) frameworks have emerged as key tools for estimating potential losses from natural hazards, both under current climate conditions and under future climate change scenarios in order to provide return-on-investment and benefit/cost assessments. In 2023 alone, natural disasters (including those “climate-related”) caused $380 billion in economic losses (22% above the 21st-century average), underscoring the urgent need for data-driven resilience strategies. This white paper compares two distinct VAR approaches in this context:
• Hazus-Based Current-Day VAR – exemplified by RiskFootprint’s methodology – which uses FEMA’s Hazus modeling to estimate the risk to assets from today’s hazard exposures (e.g., floods, wind, earthquakes). This approach integrates detailed vulnerability assessments and engineer-led site evaluations to calculate potential damage to structures, contents, and downtime for repair/restoration.
• Climate Value-at-Risk (Climate VAR) – as promoted by Climate X and similar “climate fintech” firms– which provides a forward-looking measure of risk under future climate scenarios. Climate VAR algorithms translate projected extreme weather events into financial loss metrics and even calculate the return on investment (ROI) for various resilience retrofits, largely through automated analytics without on-site inspections.

Both approaches aim to support decision-makers in strengthening asset resilience, but they differ in methodology, applications, and effectiveness. This paper will examine how RiskFootprint™ implements Hazus-based VAR in alignment with industry standards (like ASTM E3429-24), contrast it with Climate X’s automated Climate VAR platform, and critically analyze their relative advantages. By drawing on real-case applications and expert commentary, we highlight why a hybrid approach – blending current hazard models and human expertise – may offer superior guidance for resilience planning compared to purely algorithmic projections of future risk.

Methodology Comparison

Hazus-Based Value-at-Risk (RiskFootprint™ Approach)

Hazus is a nationally standardized risk modeling system developed by FEMA that estimates the physical, economic, and social impacts of disasters. Hazus software integrates multidisciplinary expertise to produce actionable risk information for hazards like earthquakes, floods, and hurricanes. RiskFootprint™, a SaaS hazard/climate assessment platform by Coastal Risk Consulting, leverages Hazus as the core engine for its current-day, VAR assessments. Key features of this approach include:
• Building-Specific Vulnerability Assessment: For each asset, RiskFootprint™ conducts an automated, comprehensive hazard exposure assessment of 30+ current risks and a detailed review of building characteristics that influence hazard vulnerability. Hazard exposure is not equal to a building’s hazard vulnerability. In order to determine a building’s vulnerability to flooding, for example, RiskFootprint™ employs both Artificial Intelligence (AI) tools and the building’s elevation certificate and plans and surveys to estimate the height above the ground level of the building’s finished first floor (FFH). To determine vulnerability to wind and seismic risks, RiskFootprint™ experts also analyze construction type, structural design, elevation, floor area, roof/wall materials, and other attributes from building plans and surveys. For critical hazards – flood, wind, and earthquake – engineers assess how the building would likely perform. For example, foundation type and firstfloor height are examined for floods, structural integrity for seismic events, and roof strength and window protections for high winds.
• Expert Data Collection and Input: Unlike fully-automated tools, RiskFootprint™ relies on human experts (often with engineering degrees) to validate and supplement data. Experienced hazard professionals review building plans and on-site survey data to ensure accuracy. They then input building-specific parameters into the Hazus model. Hazus allows user-defined facility data, meaning the generic building stock assumptions can be overridden with precise details for the asset. This high-fidelity input enables more accurate loss estimations.
• Hazus Modeling of Damage and Losses: With the hazard exposure and building data in place, Hazus is run to simulate disaster scenarios. It can model deterministic events (e.g., a 100-year flood, a M 7.0 earthquake) or probabilistic risk (annualized losses) for the site. Hazus outputs include:
o Physical Damage: expected degree of damage to the building’s structure (e.g., % of structural components damaged) and to building contents or inventory.
o Economic Losses: estimated repair/replacement cost for the structure and contents. Hazus calculates the cost of repair for buildings and even losses like business inventory or building income interruption.
o Restoration Time: an estimate of how long the facility might be out of service. For example, Hazus earthquake modeling yields functionality loss over days (downtime) based on damage levels, which RiskFootprint™ translates into “restoration days” – the time required to restore operations. This is also a benchmark for business interruption estimates.
o Social Impacts: metrics like casualties, displaced occupants, or shelter needs (especially for earthquake or hurricane scenarios), which can inform resilience planning but are secondary to this VAR analysis of asset value.