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15 Cards in this Set
- Front
- Back
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What are disasters
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High impact, low likelihood
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Chch Earthquake
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6.3 magnitude 185 deaths 1500 - 2000 injured, 164 serious injuries 2011 Liquifcation |
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CTV building
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Six Storey building collapsed Government report found building construction was faulty and should not have been approved |
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NBS rating
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Over 33% earthquake Prone Over 33% potential earthquake risk Over 100% excellent Buildings have set timelines for buildings to become compliant with NBS standards Landlord's insurance companies will not accept low strength buildings To the tenant, a low NBS rating becomes a Health and Safety issue, if the building cannot be occupied and they cannot operate staff may leave. Large corporates will not be wanting to put people at risk Smaller companies will not have the knowledge of property and find it easier to move around. If the rental streams stop the investors will default on their loans, and having to collect money on a destroyed building is difficult for banks. |
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ANZ Bank Example
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Moved staff from Victoria branch Street to Ward Street Branch after a structural engineer assessment.
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What is the impact of NBS low ratings
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Decrease in value of buildings Increase in risk and repair costs Value will need to be decreased by the strengthening works |
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What is the IEP
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Initial Evaluation Procedure - Engineer plugs in building specifications into computer aand provides a NBS rating. Very simple and may be different to DEE (Detailed Engineering Evaluation)
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What is a DEE
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Detailed Engineering Evaluation- Thorough analysis of the building. Simulates an earthquake. More accurate than IEP (Initial Evaluation Procedure). May locate critical weaknesses in the building that will significantly lower the seismic strength rating.
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ISO31000
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Avoid the activity that generates the risk Remove the risk source Change consequences Change likelihood Increase risk to pursue opportunity Share with another party Retain by informed decision. |
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Lease Provisions
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26.1 Total Destruction 27.1 Partial Destruction 27.5 No access in emergency May have a clause in the lease that requires the building to be above a certain NBS rating on assessment. Can call on landlord to strengthen building. Exposure to higher CAPEX on something that is not controlled. Building code may change in future and NBS may change. If exercised at beginning, it will be a large CAPEX and may not have cash flow. Ideally, have a specified time period that NBS can be assessed. Could also allow for the LL independent assessment, lease extensions, if works are called on. |
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What should a business have If disaster strikes
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A business continuity plan. Training around what to do in a disaster Continuity of business- have planning around mobility such as laptops for employees, be able to work from home. Office transfers, back up data centres BCS (Building continuity sites) so that critical operations can continue. Westpac has desks prepared if disaster strikes. |
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What are the three components of insurance
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Insured Risk Compensation Premium Need to know what risks are being insured against, read fine print, get insurance broker to help. If one side increases, so too will other. |
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Indemnity Insurance
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Measures loss in value. Based on Market value- improvements = added value - land value. Will pay out improvements value to reinstate to market value |
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Replacement/Reinstatement
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Cost payment. Cost approach. Value = building cost + land. Improvements is the cost to build a building. Reinstatement insurance is compensation based on 'replacing' the building, set at a dollar amound (sum insured). Need to be aware of a site specific rebuild |
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Under insurance
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May assume how much it will cost to rebuild but various factors will change building costs overtime. Including inflation, design fees, building works, building consents.Events such as quakes, increase construction costs.
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