Back in the 1980s and early 1990s, financial institutions commonly based environmental due diligence decisions strictly on loan size. As awareness about environmental risk evolved, a property’s current or past use has also become an important determinant of the level of environmental due diligence warranted. Although any site can be contaminated, certain property types should merit closer inspection and more detailed investigations than others. Gas stations, dry cleaners and industrial facilities, for instance, are among the highest-risk property types from an environmental perspective. To help risk managers at community banks better understand property uses that should raise concerns during environmental due diligence, this Technical Brief is based on outreach by EDR Insight to five environmental professionals in the field. Below are their responses to these questions:
What would you tell a new risk manager at a community bank about why this property use raises an environmental red flag? What types of risks are typically associated with this type of operation?