Flood risk and mapping assessment issues

0 CommentsBy

Posted by:
Nick Selmes
EMEA Upstream Sustainability Services

The recent floods in Australia are a reminder of the severe weather conditions that can result from climate change. The damage from such events to a property’s investment value and structure can be considerable.

As an investor, can you be sure you’ve covered all your risks in this area?

The Environment Agency, within England & Wales, calculates that there are over 2.5 million properties at risk from river/coastal flooding and nearly 4 million at risk from surface water flooding.

Whilst the purchase of new assets with these risks are increasingly being blocked by investment committees, there appears to be a risk ‘blind spot’ for many investors in respect of their existing stock, caused by a combination of three factors:

Regular Projections
More frequent projections of potential events lead to regular changes to risk maps. Assets that were bought risk-free can find themselves, sometimes at the point of a sale, being classified as a high risk area, which can re-open negotiations.

Advances in Mapping Technology
Increasingly sophisticated mapping techniques can produce different risk areas every 25 square meters. A single postcode, the usual method by which property details are checked by GIS systems, can thereby have multiple risk levels, the highest of which can be missed without a manual check.

Human Error
The final issue is more ‘left field’. Recent work we have undertaken tells us that a number of fund managers/agents don’t know where their properties are. Well, at least not accurately enough for the mapping software because often the postcode won’t be completely correct, or the asset might straddle two postcodes and only one may be entered.

Either way, without regular and manual checks investors are likely to continue to find nasty surprises in the years ahead.

Leave a Reply

Your email address will not be published. Required fields are marked *