Worldwide, earthquake risk is among the most serious of the risks to the proper functioning of our built environment, and earthquakes threaten life, property, and economic and social stability.  The engineering and emergency management communities use two levels of seismic probability to quantify risk: the Design Basis Earthquake (DBE), and the Maximum Credible Earthquake (MCE).

The DBE, also referred to as the “Expected” earthquake, is the maximum earthquake reasonably expected to occur during the useful life of a structure or system.  The MCE, also called the “Extreme” earthquake, represents the most severe earthquake that can possibly occur at a given location.  Current US building codes are intended to provide safety of occupants and prevent total structural collapse, but they do not guarantee the building will be usable – even after the DBE.

Earthquakes present different types of risk to communities, businesses and individuals.  These risk types can be generally grouped as follows:

• Safety
• Damage
• Downtime

Safety

Above all else, a building owner has a responsibility to ensure the safety of the occupants of their building, as well as that of people who may be near the exterior of the building at the time of an earthquake. In most regions, you may find buildings of different construction types and of different ages populating the street. Some older buildings may not perform nearly as well as the newer buildings, especially depending on the construction types. When first evaluating a building for seismic performance, a top priority is to evaluate for any potential falling hazards, for areas where egress may be blocked or even more significantly, for any portions of the building that may be become unstable and susceptible to collapse during the event

Damage – Cost of Repair

The costs of repairs to a building to restore it to its pre-event condition can be significant, and depending on the severity of the damage, total reconstruction may be necessary.  Some building owners have earthquake insurance, but premiums are costly and the deductible can be overwhelming after the event.

Downtime – Cost of Business Interruption

Even a brand-new building may not be usable after an earthquake – either because physical damage prevents its proper function, or the occupants’ perception of their personal risk is too high, causing them to refuse to enter the building.  The cost of business interruption can vastly exceed the cost of repairs.  If repairs need to be made, the time to make those repairs can be significant and may directly result in business interruption losses.  Similarly, if the damage is so severe that the building must be demolished and replaced, the resulting business interruption may be many months to several years; previous disasters have shown this situation often results in permanent relocation, or even spell the end of the affected businesses.

Owners and occupants of damaged and undamaged buildings can face business interruption losses – often directly related to the response time of official inspectors, the availability and response of the owner’s structural engineers, and their ability to bring on an available contractor to complete the repairs. For a major business facility, every day that the facility is out of operation can be very expensive. For example, a $5 M per year facility will face a loss of revenue of over $19,000 every day that building is out of use.