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Integrating Flood Risk into House Price Models Using Expected Discounted Loss: Evidence from the Czech Republic in 2024Original contributions
Marek Folprecht
FFA Working Papers 6:002 (2026)102 
Prices of houses in flood risk zones are subject to a price discount reflecting the risk of losses caused by floods. First, the article establishes a framework for pricing flood risk using the expected discounted loss approach, based on the capital asset pricing model and the Gumbel mixture model of estimated likelihood and impacts of flood risk events. The measure advantage is dimensionality reduction and interpretability. Second, the resulting measure of flood risk is tested to assess whether it can explain differences in house prices using a large data sample from the Czech Republic in 2024. I show that the flood risk measure, expected discounted...
Measuring Flood Risk in Czechia with Stress Testing and a Gumbel copula‑based VaROriginal contributions
Marek Folprecht
FFA Working Papers 6:001 (2026)327
The study presents a holistic approach to modeling flood risk of real estate properties. The method combines the hydrological flow simulation model and a model of financial losses. Two use cases of the model are discussed. First, a stress testing method, based on historical scenario simulations, is presented. Next, a Value at Risk approach using the Generalized extreme value distribution and the Gumbel copula is discussed. Both methods are then tested on a large sample of Czech house data. The results show that the model can replicate the order of historical flood magnitudes under the historical scenarios. Moreover, the Value at Risk approach can generate...