What to do with this exterior insulation?
Does that insulation go into the ground? In otherwords, is that exterior insulation for the basement foundation? If so, then it's pretty much useless at this point. It wasn't sealed properly and is likely waterlogged and providing minimal insulating value. In which case, you can just get rid of it.

If, on the other hand, it's insulation on our exterior walls of the house, I'd suggest trimming off a bit of the bottom (you don't want that stuff in direct contact with surface concrete or soil). I'd then probably consider some sort of cedar skirting to match the siding and glue it onto the insulation (again, making sure the skirting is not in contact with the ground).