4.1 Uses—This guide is intended for use on a voluntary basis by parties such as lenders, loan servicers, insurers and equity investors in real estate (Users) who wish to estimate possible earthquake losses to buildings. This guide outlines procedures for conducting a seismic risk assessment for a specific User considering the User's requirements for due diligence. The specific purpose of this guide is to provide Users with seismic risk assessment during the anticipated term for holding either the mortgage or the deed. A seismic risk assessment prepared in accordance with this guide should reference or state that the guidance in this document was used as a basis for the report and should also identify any deviations from the guidelines. This guide is intended to reflect a commercially prudent and reasonable investigation for performance of seismic risk assessments.

4.1.1 Users—This Guide is designed to assist the User in developing information about the earthquake-related damage potential of a building, or groups of buildings.

4.1.1.1 Use of this guide may permit a User to satisfy, in part, their requirements for due diligence in assessing a building’s potential for losses associated with earthquakes for real estate transactions.

4.1.2 Types of Investigations—This guide provides suggested approaches for the performance of five different types of assessments. Each is intended to serve different financial and management needs of the User. Several of these types of assessment specifically depend on characterization of the earthquake ground motion as given in Section 7.

4.1.2.1 Building Stability (BS)—Assessment of whether the building will maintain vertical load-carrying capacity in whole or in part during considered earthquake ground motions (see Section 8).

4.1.2.2 Site Stability (SS)—Assessment of the likelihood that the site will remain stable in earthquakes and is not subject to failure through faulting, soil liquefaction, landslide, or other site response that may threaten the building's stability or cause significant damage (see Section 9).

4.1.2.3 Building Damageability (BD)—Assessment of the damageability of the building(s) during earthquake ground motions and the degree of damage expected over time. The assessment includes performing and completing the building damageability assessment as either a probable loss (PL) or a scenario loss (SL) assessment, or both (see Section 10).

4.1.2.4 Contents Damageability (CD)—Assessment of the damageability of the contents to earthquake ground motions. This guide suggests that the contents damageability assessment be performed using the SL assessment approach (see Section 11).

4.1.2.5 Business Interruption (BI)—Assessment of the implications for continued use or partial use of the building for its intended purpose due to earthquake damage, whether to the building systems, or contents, or both. This guide suggests that the business interruption assessment be performed using the SL assessment approach (see Section 12).

4.1.3 Application and Temporal Relevance of Report—The User should only rely on a seismic risk assessment report for the specific purpose that it was intended, and upon confirmation, that the building is in the condition it was at the time of assessment and that the understanding of seismic hazards and performance of the specific building type have not changed.

4.1.4 Availability of Information—This guide recognizes that a Provider’s opinions and observations may be affected or contingent on information (or the lack thereof) that is readily available to the Provider during the conduct of an investigation. For instance, a Provider’s observations may be affected by the number of people using the building or the availability of property management to provide information, such as the construction documents.

4.1.5 Site-Specific—Seismic risk assessments are site-specific in that they relate to estimation of earthquake loss to building(s) located at a specific site.

4.2 Principles—The following principles are an integral part of this guide and should be referred to in resolving any ambiguity or exercising such discretion as is accorded the User or the Provider in estimating loss to buildings from earthquakes. The principles should also be used in judging whether a User or Provider has conducted an appropriate assessment and estimation of earthquake loss to a building.

4.2.1 Uncertainty Not Eliminated—No estimate can wholly eliminate uncertainty regarding damage resulting from actual earthquakes. The successive levels of investigation described in this guide are intended to reduce, but not eliminate, uncertainty regarding the estimation of damage. This guide acknowledges the reasonable limits of time and cost related to a selected level of assessment.

4.2.2 Not Exhaustive—There is a point at which the cost to gather information outweighs the usefulness of the information and, in fact, may be detrimental to the orderly completion of transactions within the resources available to support the investigation. This guide identifies and suggests that a balance be sought between the competing goals of limiting the costs and time demands versus limiting the resulting uncertainty regarding unknown conditions or information by acquiring as much information as possible.

Note 2: Appropriate due diligence according to this guide is not to be construed as technically exhaustive. There is a point at which the cost of information obtained or the time required to conduct the seismic risk assessment may outweigh the usefulness of the information and, in fact, may be a material detriment to the orderly and timely completion of a commercial real estate transaction. It is the intent of this guide to attempt to identify a balance between limiting the costs and time demands inherent in performing a seismic risk assessment and reducing the uncertainty about unknown physical deficiencies resulting from completing additional inquiry.

4.2.3 Level of Investigation—Not every property warrants the same level of investigation. Consistent with good commercial or customary practice, choosing the appropriate level of investigation is guided by the type and age of buildings subject to assessment, the resources and time available, the anticipated severity of shaking, the expertise and risk tolerance of the User, and the information developed during the course of the investigation.

4.3 Subsequent Use of Seismic Risk Assessments—This guide recognizes that assessments of buildings prepared for specified levels of investigation and performed on the basis of the approaches discussed herein may include information that subsequent Users will want to use to avoid undertaking duplicative investigations. Consequently, this guide describes procedures to assist subsequent Users in determining how appropriate it would be to use these results. Usage of prior reports is based on the following principles that should be adhered to in addition to the specific procedures set forth in this guide.

4.3.1 Comparability—An estimate of loss to buildings from earthquakes is not deemed as inappropriate merely because it did not identify all potentially vulnerable areas in connection with a building or a group of buildings. Seismic risk assessments must be evaluated based on the reasonableness of judgments made at the time and under the circumstances in which they were made. The result of any subsequent seismic risk assessments performed to similar parameters should not be considered as valid standards to judge the appropriateness of any prior seismic risk assessment based on hindsight, new information, use of developing technology or analytical techniques, or other factors.

4.3.2 Use of Prior Information—Users and Providers may use information in prior reports that meet or exceed the requirements of this guide for specified levels of investigation and then only provided that the specific procedures set forth in the guide were met, including the qualification of the Provider.

4.3.3 Prior Assessment Meets or Exceeds—A prior seismic risk assessment report prepared for specified levels of investigation may be used in its entirety, without regard to specific procedures set forth in this guide, if in the judgment of the Provider, the prior report was prepared for specified levels of investigation meeting or exceeding the requirements of this guide and the conditions of the building(s) and the seismic hazards affecting the site are not likely to have changed materially since the prior report was prepared. In making this judgment, the Provider should consider the types of building construction assessed in the report and any new information related to the behavior of that specific building construction type in recent earthquakes, as well as current understanding of the site conditions.

4.3.4 Current Investigation—Prior seismic risk assessments should not be used without current investigation of conditions likely to affect the current seismic risk assessment. Likely conditions include the current level of knowledge on and experience with building constructions of particular types in recent earthquakes, as well as current understanding of the site conditions that differ from those in existence when the prior report was prepared.

4.3.5 Actual Knowledge Exception—If the User or Provider has actual knowledge that the information being used from a prior seismic risk assessment report is not accurate or is suspected of being inaccurate, then such information from a prior report should not be used.

4.4 When a new seismic risk assessment is performed for the same User that is consistent with this guide and has a higher level of investigation than a prior investigation, then the new investigation should supersede the former one.

This guide provides guidance on conducting seismic risk assessments for buildings. As such, this guide assists a User to assess a property�s potential for losses from earthquake occurrences. Hazards addressed in this guide include earthquake ground shaking, earthquake-caused site instability, including fault rupture, landslides and soil liquefaction, lateral spreading and settlement, and earthquake-caused off-site response impacting the property, including flooding from dam or dike failure, tsunamis and seiches. This guide is intended to reflect a commercially prudent and reasonable investigation for performance of seismic risk assessments. Seismic risk assessments may be performed for an individual building or a group of buildings. This guide provides suggested approaches for the performance of five different types of seismic risk assessments. Building stability, site stability, building damageability, contents damageability, business interruption, and application and temporal relevance of report. Each is intended to serve different financial and management needs of the User. An earthquake ground motion assessment should be conducted in conjuction with probable loss evaluations for building damageability and may have applications in some scenario loss studies, as well as building stability or site stability assessments. Seismic risk assessments may consider varying degrees of assessment of a building or buildings from Level 0 to Level 3.

1.1 This guide provides guidance on conducting seismic risk assessments for buildings. As such, this guide assists a User to assess a property's potential for losses from earthquake occurrences.

1.1.1 Hazards addressed in this guide include:

1.1.1.1 Earthquake ground shaking,

1.1.1.2 Earthquake-caused site instability, including fault rupture, landslides, soil liquefaction, lateral spreading, and settlement, and

1.1.1.3 Earthquake-caused off-site response impacting the property, including flooding from dam or dike failure, tsunamis, and seiches.

1.1.2 This guide does not address the following:

1.1.2.1 Earthquake-caused fires and toxic materials releases.

1.1.2.2 Federal, state, or local laws and regulations of building construction or maintenance. Users are cautioned that current federal, state, and local laws and regulations may differ from those in effect at the time of the original construction of the building(s).

1.1.2.3 Preservation of life safety.

1.1.2.4 Prevention of building damage.

1.1.2.5 Contractual and legal obligations between prior and subsequent Users of seismic risk assessment reports or between Providers who prepared the report and those who would like to use such prior reports.

1.1.2.6 Contractual and legal obligations between a Provider and a User, and other parties, if any.

1.1.3 It is the responsibility of the User of this guide to establish appropriate life safety and damage prevention practices and determine the applicability of current regulatory limitations prior to use.

1.2 The objectives of this guide are:

1.2.1 To synthesize and document guidelines for seismic risk assessment of buildings;

1.2.2 To encourage standardized seismic risk assessments;

1.2.3 To establish guidelines for field observations of the site and physical conditions, and the document review and research considered appropriate, practical, sufficient, and reasonable for seismic risk assessment;

1.2.4 To establish guidelines on what reasonably can be expected of and delivered by a Provider in conducting the seismic risk assessment of buildings; and

1.2.5 To establish guidelines by which a Provider can communicate to the User observations, opinions, and conclusions in a manner that is meaningful and not misleading either by content or by omission.

1.3 The values stated in inch-pound units are to be regarded as standard. The values given in parentheses are mathematical conversions to SI units that are provided for information only and are not considered standard.

1.4 This international standard was developed in accordance with internationally recognized principles on standardization established in the Decision on Principles for the Development of International Standards, Guides and Recommendations issued by the World Trade Organization Technical Barriers to Trade (TBT) Committee.