Flood modeling is highly influenced by topography data set. Lower resolution digital elevation models (DEMs) are usually used because of their availability and less computational burden when they are used in modeling applications. However, low accuracy of these DEMs yields to even lower accuracy in flood risk analysis through spatial modeling. This study aims to explore the DEM resolution effects on coastal flood risk assessments. For this purpose, deterministic and probabilistic approaches are employed for flood inundation modeling utilizing hydrologically connected bathtub method. High‐resolution light detection and ranging (LiDAR) DEM is considered as the most accurate data from which different resolution maps are obtained using resampling techniques. This is incorporated into an error analysis framework along with U.S. Geological Survey (USGS) National Elevation Dataset (NED) DEMs. The probabilistic framework is developed by simulating the spatial variability of elevation errors compared to LiDAR DEM through a Monte Carlo‐based method called sequential Gaussian simulation. The proposed methodology is applied to the lower Manhattan in New York City. By integrating the flood model into the developed framework, flood inundation probability at each grid cells is obtained. Furthermore, using the concept of accuracy‐efficiency tradeoffs, a framework for selecting a suitable spatial resolution for probabilistic flood risk assessment has been suggested. The results show that by exercising a range of options presented in this paper, a broader insight into mapping resolution can be provided, improving flood assessment, evacuation zones, and mitigation plans depending upon the data availability in a region.