Probable Maximum Loss (PML)

The Probable Maximum Loss (PML) is a tool used to evaluate the seismic risk of a building and identify assets with high seismic risk. The Probable Maximum Loss report identifies the PML value, expressed as a percentage of the building’s replacement cost and estimates the potential damage during a 475-year earthquake – the lower the percentage, the lower the expected damage. The PML value can be expressed either as the Scenario Expected Loss (SEL) or the Scenario Upper Loss (SUL).
Standards for seismic risk assessments are published by the ASTM. Standards should be carefully reviewed to fully understand the work to be completed as well as the limitations of reports. In addition, the National Engineering and Environmental Due Diligence Association (NEEDDA) has published a white paper that can provide a useful starting point. The National Engineering and Environmental Due Diligence Association or “NEEDDA” is a 501(c)(6) non-profit organization formed to improve the practice of engineering and environmental due diligence for all stakeholders, members, clients, vendors, and non-member firms. Read the full White Paper here.
The scope of work for the Probable Maximum Loss can vary, but is primarily identified by two ASTM standards: E2026 and E2557.
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