Physical Risk Management in Commercial Timberland

Timberland has historically delivered low-volatility, inflation-resistant returns with a low correlation with other asset classes.1 This performance is primarily driven by the biological growth of trees and the inherent value and downside protection of productive land.2 However, realizing this performance requires active management of physical risks such as fire, pests, and extreme weather. BTG Pactual Timberland Investment Group (TIG) applies a disciplined, six-step risk management framework across its US$ 8.5B, 3.4-million-acre timberland portfolio*, averaging casualty losses from all causes (calculated as total casualty loss divided by fair market value of the TIG portfolio) of just 5 bps (0.05%) per annum from 2012-2025.

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