Increase Resilience, Reduce Risk

By Better Buildings Beat Team on May 26, 2020

Resilience is emerging as a critical issue for commercial buildings, particularly in light of recent disruptions from climate and weather events. Owners and operators of commercial properties are placing greater emphasis on improving the resilience of their assets and mitigating risk from natural disasters and other stressors. At the same time, financial markets are beginning to think more seriously about how to manage systemic resilience risk in real estate portfolios.

Research shows that resilience and financial performance are closely linked. Investors, mortgage lenders, and insurers are increasingly concluding that climate and resilience risk can have a meaningful impact on financial returns and that managing this risk is a critical part of fiduciary duty. Building owners are putting resilience plans in place to preserve the value of their properties, protect occupants, and attract investment. However, resilience is a fluid topic, and many building owners are unsure where to start and what tools are available to help.

In response, the U.S. Department of Energy brought together a roundtable of Better Buildings Financial Allies, partners, and stakeholders to foster clarity, collaboration, and guidance on emerging resilience issues and how they affect energy and financial performance in buildings. The main outcome of this work is the Finance and Resilience Roadmap – a set of five resources and case studies designed to help commercial building owners develop a plan for measuring, managing, and mitigating resilience risk:

  1. Building the Financial Business Case for Resilience
  2. Managing Insurance Cost and Business Risk
  3. Financing and Implementing Resilience Projects
  4. Benchmarking and Disclosing Resilience Performance
  5. Creating a Resilience Risk Management Plan

Other resources include implementation models from Principal Real Estate Investors on climate risk assessment and from NYCEEC on increasing hotel resilience.

The Resilience Roadmap was launched through a two-part webinar series featuring leading experts that participated in the Finance and Resilience Initiative:

  • Part 1 highlighted how commercial building owners can build the financial business case for resilience within an organization, best practices for measuring financial risk, and strategies for managing insurance cost and business risk.
  • Part 2 focused on different mechanisms for financing resilience projects, frameworks for disclosing resilience performance, and pulling everything into a resilience risk management plan.

 

View the Finance and Resilience Roadmap on the Better Buildings Solution Center at: https://betterbuildingssolutioncenter.energy.gov/finance-resilience-toolkit