What is Wildfire Risk Management?

What is Wildfire Risk Management?

Wildfire risk management is a systematic approach to reducing the probability and consequences of wildfire impacts on communities, ecosystems, infrastructure, and business operations. It integrates fuel management (prescribed burns, mechanical thinning), structural hardening (defensible space, ignition-resistant construction), early detection and suppression systems, land-use planning, insurance and financial risk transfer, and post-fire recovery planning. As climate change extends fire seasons and increases fire intensity, wildfire risk management has moved from a forestry concern to a core element of corporate and municipal resilience strategy.

Why It Matters

The scale of wildfire destruction has accelerated dramatically. The 2023 Maui wildfire killed 101 people and caused $5.5 billion in damages—the deadliest U.S. wildfire in over a century. California's 2020 fire season burned 4.2 million acres, more than double the previous record. Canada's 2023 fire season burned 18.5 million hectares—six times the historical average—and blanketed the U.S. Eastern Seaboard in hazardous smoke. Insured wildfire losses globally exceeded $10 billion in multiple recent years.

The wildland-urban interface (WUI)—where development meets fire-prone vegetation—has expanded as populations grow into formerly wild areas. Roughly 44 million U.S. homes sit in the WUI, and one-third of new home construction occurs there. This concentration of exposure in fire-prone landscapes is a structural problem that suppression alone cannot solve. The U.S. spends over $3 billion annually on federal fire suppression, yet suppressed fires often grow back larger when they inevitably escape containment.

Insurance markets are responding with brutal clarity. State Farm and Allstate stopped writing new homeowner policies in California in 2023, citing wildfire exposure. The California FAIR Plan—the insurer of last resort—saw its exposure grow to $300 billion, raising solvency concerns. Similar insurance retreat is occurring in Colorado, Oregon, and other fire-prone states. For commercial real estate, utility infrastructure, and corporate campuses in fire zones, insurance availability and affordability are becoming existential operational questions.

Smoke impacts extend risk far beyond the fire perimeter. The EPA estimates that wildfire smoke exposure causes 10,000–20,000 premature deaths annually in the U.S. Smoke-related air quality events disrupt business operations, trigger worker safety obligations, damage agricultural crops, and reduce solar energy output by 10–30% during major smoke events. Companies hundreds of miles from any fire now need smoke contingency plans.

How It Works / Key Components

Effective wildfire risk management operates at landscape, community, and asset scales. At the landscape level, fuel management is the most effective risk reduction tool. Prescribed burning—long practiced by Indigenous peoples—reduces fuel loads and fire intensity. The U.S. Forest Service and Department of Interior aim to treat 20–50 million acres over the next decade through the Bipartisan Infrastructure Law's $3.3 billion wildfire funding. However, current treatment rates of roughly 3 million acres per year remain well below what's needed to meaningfully alter landscape-level risk.

Community-level strategies focus on defensible space and home hardening. Research from the Insurance Institute for Business & Home Safety (IBHS) demonstrates that homes with noncombustible roofs, enclosed eaves, tempered glass windows, and five feet of noncombustible space immediately adjacent to structures survive wildfires at dramatically higher rates. The Firewise USA program provides community-level assessment and action planning frameworks.

Corporate wildfire risk management requires integrating fire exposure into enterprise risk frameworks. This includes site-level vulnerability assessments using fire simulation modeling (tools like FlamMap and Technosylva), business continuity planning for fire and smoke events, supply chain mapping to identify fire-exposed nodes, utility power shutoff preparedness (Pacific Gas & Electric's Public Safety Power Shutoffs affect millions of customers annually), and engagement with insurance markets through detailed risk mitigation documentation.

Financial risk transfer is evolving beyond traditional insurance. Parametric wildfire insurance triggers payouts based on fire proximity or satellite-detected burn area rather than assessed damage, enabling faster recovery. Catastrophe bonds covering wildfire risk are emerging. California's wildfire fund, capitalized at $21 billion, demonstrates public-sector risk pooling. Companies should evaluate their risk transfer portfolio across traditional insurance, parametric products, self-insurance reserves, and captive structures.

Council Fire's Approach

Council Fire provides wildfire risk assessments for corporate and municipal clients using fire behavior modeling, climate-adjusted projections, and asset-level vulnerability analysis. We develop integrated risk management strategies spanning fuel management investment, structural hardening programs, operational continuity protocols, insurance optimization, and post-fire recovery planning—ensuring clients reduce both physical losses and the cascading financial impacts of wildfire in a warming climate.

Frequently Asked Questions

How is climate change making wildfires worse?

Climate change affects wildfires through multiple mechanisms: higher temperatures increase evapotranspiration, drying fuels faster and more thoroughly; reduced snowpack leads to earlier and longer fire seasons (the Western U.S. fire season has lengthened by 84 days since the 1970s); drought stress kills trees, creating standing dead fuel; and bark beetle outbreaks—exacerbated by warmer winters—have killed billions of trees across Western forests. Attribution science now shows that climate change roughly doubled the area burned in Western U.S. forests compared to what would have occurred without anthropogenic warming.

What should companies with facilities in fire-prone areas do first?

Start with a site-level wildfire hazard assessment that considers topography, vegetation, fire history, and climate projections within a 5-mile radius. Implement defensible space and structural hardening per IBHS and local fire code standards. Develop business continuity plans for both direct fire impact and smoke/power shutoff scenarios. Document all mitigation measures thoroughly—this documentation is increasingly required by insurers to maintain coverage and directly affects premium pricing.

How do utility power shutoffs create secondary business risks?

Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric implement Public Safety Power Shutoffs (PSPS) during high fire-risk weather, cutting electricity to reduce ignition risk from power lines. These events can last 24–72+ hours and affect large geographic areas with little advance notice. Businesses without backup generation or energy storage face production shutdowns, spoilage, data center outages, and security system failures. Critical facilities in fire-prone areas should assess PSPS exposure and invest in on-site generation, battery storage, or microgrids as operational insurance.