How can wildfire risk modelling help protect your business?
How can wildfire risk modelling help protect your business?
Increasingly frequent and severe wildfires pose a significant risk to Canadian businesses, supply chains, and communities. Cutting-edge wildfire risk intelligence tools can help reduce risks to your business by taking greater control of its wildfire preparedness.
To mitigate risks and improve business resilience, it is important to understand:
- Why wildfire risk modelling is increasingly important
- What wildfire risk modelling is
- Elements to support comprehensive wildfire risk modelling
Increasingly frequent and severe wildfires pose a significant risk to Canadian businesses, supply chains, and communities. Climate change is driving longer fire seasons and more extreme weather events — and business leaders must shift their focus from reactive crisis management to proactive mitigation planning. Understanding and mitigating wildfire risks is no longer optional. It’s crucial to ensure the operational continuity and financial stability of your business.
Cutting-edge wildfire risk intelligence tools can help reduce risks to your business by taking greater control through wildfire preparedness. These tools can help you model plausible fire risk scenarios and provide insight into how you can prepare for, adapt to, and mitigate the impact of wildfires before disaster strikes. Leveraging highly advanced data and predictive analytics is vital to help your business build resilience, safeguard its assets, and ensure continuity in an increasingly volatile climate.
Why wildfire risk modelling is growing increasingly important
Global wildfire losses between 2014 and 2023 are estimated at US$106 billion after factoring in business disruptions, insurance claims, and infrastructure damage. Canada has been especially hard hit by the drastic increase in wildfires over the last decade, with 2023 being especially destructive.
The more than 15 million hectares burned was more than six times the national average, more than double the previous record from 1989, and resulted in widespread environmental and economic damage. This upward trend highlights the urgency for businesses to integrate wildfire risk modelling into their risk management and sustainability strategies.
What is wildfire risk modelling?
Wildfire risk modelling is the process of using data, statistical methods, and computational models to assess and predict the likelihood, behaviour, and potential impacts of wildfires in a given area. It integrates various factors such as climate conditions, vegetation type, topography, historical fire data, and human activities to estimate the probability of a wildfire occurring and its possible consequences.
Without these critical insights, your business is vulnerable to costly disruptions and reputational damage when a wildfire strikes.
Risk exposure
Determining the risk exposure of your business involves identifying high-risk areas based on historical wildfire patterns, climate projections, and vegetation mapping. This can help you pinpoint high-risk areas in your business and develop targeted mitigation strategies to reduce potential losses.
Supply chain vulnerability
Assessing potential disruptions to logistics, critical suppliers, and distribution networks of your business is crucial to understand supply chain vulnerability. This can help you create contingency plans if any of your suppliers are inoperable or develop alternative distribution network pathways to ensure operational continuity during and after a wildfire event.
Potential business impacts
Wildfire risk modelling can help you gain a better understanding of the potential impact of an extreme weather event on your business. It can help determine potential financial losses and the impact of operational disruptions such as facility closures. Additionally, it is crucial to assess the insurance implications of a wildfire event on your business, such as policy coverage and premium adjustments, to ensure it has adequate financial protection.
Scenario planning and mitigation strategies
Wildfire risk modelling enhances existing scenario planning and mitigation strategies to reduce threats to your business. This includes developing proactive risk management plans to identify potential threats and develop preventative measures. Comprehensive emergency response frameworks can help ensure your employees, assets, and operations are protected. Additionally, adaptation strategies such as infrastructure modifications can help enhance resilience against wildfire events.
Enterprise Risk Services
What elements can support comprehensive wildfire risk modelling?
There are several elements to look for in a wildfire risk intelligence tool to help you effectively reduce the risks to your business, including:
Expansive data sets and AI-driven insights
Advanced wildfire simulation and climate change models can increase confidence in your scenario planning. Comprehensive data sets can provide a solid foundation to pinpoint high-risk areas and potential threats. AI can help analyze these complex data sets to detect patterns and forecast wildfire behaviour to help your business proactively optimize its mitigation strategies and reduce wildfire-related vulnerabilities.
Industry-specific customization
No two industries are the same, and each industry faces unique vulnerabilities to wildfire events. Tailored risk assessments for key Canadian sectors can help you mitigate and manage specific wildfire threats to your operations. For example, manufacturing businesses must assess supply chain disruptions that could impact production — while the energy sector faces risks such as damage to critical pipeline or powerline infrastructure, leading to operational shutdowns. The forestry industry must navigate risks such as timber loss, operational delays, and heightened fire prevention regulations that can impact production. Industry-specific customization can help your business develop strategies that addresses its specific risks and enhances its resilience.
Actionable intelligence
The wildfire risk intelligence tool that you choose should equip your business to make informed choices on risk mitigation investments, such as supply chain diversification or fire-resistant infrastructure. It should also provide actionable intelligence involving insurance strategies and operational resilience. This includes providing data-driven insights on the insurance policy coverage that will provide the best protection for your business or which areas of your supply chain to diversify.
Compliance and sustainability integration
Wildfire risk intelligence tools can help your business align with regulatory expectations and sustainability reporting requirements to future-proof your business. The International Sustainability Standards Board developed the IFRS Sustainability Disclosure Standards which have directly influenced disclosure standards in many global markets. These standards require companies to include disclosure of climate-related risks and opportunities to show business continuity. Integrating wildfire risk intelligence into your business strategy can help ensure compliance, strengthen long-term stability, and support overall business resiliency.
Take the next steps
Wildfire risks are rising — and waiting until disaster strikes is not an option. It is crucial to equip your business with the data, tools, and strategies to safeguard your operations and protect supply chains in an increasingly volatile climate.
Our wildfire risk intelligence solution can help you build a more resilient and sustainable business. Contact MNP’s Edward Olson at 250.718.8687 or [email protected] for more information.
Edward Olson , CIA, CPA, CA
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