Wildfire: the new primary peril
For decades, catastrophe models and exposure management have focused principally on so-called primary perils: hurricanes, earthquakes, and major flood events capable of generating large, systemic losses. By contrast, wildfire, hail, and severe convective storms were conventionally treated as secondary perils, producing attritional losses rather than major accumulation events. Today, that distinction is breaking down.
Changing climate patterns, prolonged drought, and an accumulation of combustible vegetation are creating conditions in which a single ignition can result in a major catastrophe. This is further amplified by development at the urban-rural fringe, which is bringing people and property into closer proximity to high-risk areas. As a result, wildfires are no longer viewed as a regional threat confined to a handful of geographies, but has, according to Swiss Re, become the fastest-growing weather-related source of loss around the globe.
Exceptional in both scale and significance, the Palisades and Eaton wildfires that struck Southern California in January 2025 are indicative of this trend. The fires burned more than 55,000 acres of land, claimed at least 31 lives, and generated tens of billions of dollars in insured losses. Perhaps more significantly, the fires occurred outside the winter months – defying traditional assumptions about when the wildfire season begins and ends.
The world on fire
These trends are not unique to North America. Australia has long lived with bushfire risk, but rising temperatures, dryer land, and stronger winders are contributing to longer, less predictable fire seasons. In recent years, incidents have occurred earlier and ended later in the year, inevitably placing more businesses and property at risk. In 2026, these concerns have been heightened by a strengthening El Nino formation, which could increase the likelihood of a very strong weather event, according to forecasts from Australia’s Bureau of Meteorology. A recent winter of below-average rainfall, and an abundance of fuel loads, are further amplifying the risk. Similar incidents are increasingly widespread across the Southern Hemisphere, with record temperatures and raging fires reported across Argentina, Chile, and South Africa.
But wildfires also continue to expand into non-traditional regions. In 2025, the European Union suffered its most destructive wildfire season on record. Satellite analysis from the European Forest Fire Information System (EFFIS), show that more than 1 million hectares were ravaged by fire across several EU countries – roughly equivalent to the area of Cyprus. The season started early, with more than 100,000 hectares burned in March alone – itself a record – before peaking in July and August. The countries hardest-hit included southerly Spain and Portugal, which accounted for 43 percent of all burned land. Only two countries – Luxembourg and Malta – were unscathed by wildfire.
The UK, too, experienced its worse year on record for wildfires in 2025, including the country’s first recorded megafire, which saw more than 47,879 hectares of land burnt in the Scottish Highlands and neighboring Moray. The fires led to the closures of local roads, and disruption to nearby residents and businesses. Summer 2026 has seen frequent wildfires. The most high-profile of these was a large heathland fire that broke out at Dunwich Heath, Suffolk. The fire, which lasted more than 10 days, prompted UK Prime Minister Andy Burnham to describe the country as a “tinderbox” for wildfire activity. He later convened a Cabinet Office Briefing Rooms (COBR) meeting to discuss the country’s response to the increasing damage wrought by fires.
Once viewed as primarily rural events, wildfires are increasingly becoming threats to urban and commercial centres.
A new operating reality
For businesses around the globe, the implications of these trends are stark. Wildfire is no longer solely an environmental risk; it is also an operational one. The most immediate effects arise from direct physical damage. Agricultural businesses may suffer loss of crops, injury or fatality to livestock, as well as damage to machinery, buildings, fencing, and critical infrastructure. Agricultural machinery and equipment continues to be one of the most common causes of fires, particularly during dry periods, when a single spark is capable of igniting surrounding vegetation. But for most fires, the extent of its impact is driven less by how it starts, than by the speed and scale at which it spreads.
Yet, for many businesses, the greatest losses arise indirectly. Wildfires can disrupt business operations, sever critical supply chains, and damage or inhibit transport links. Access to affected locations is often limited, hindering efficient response. Environmental damage may create reputational consequences, while neighboring landowners may pursue liability claims where fires are alleged to have originated from commercial operations. In some cases, these indirect costs may even exceed the initial property damage.
At the same time, it is when temperatures are highest that demand for electricity is greatest. Ironically, therefore, energy infrastructure is placed under its greatest environmental stress at precisely the moment it is needed most. For operators, lenders, and insurers, this raises questions about long-term reliability, asset degradation, and whether assumptions underpinning warranties, contracts, and performance guarantees will remain valid over the lifespan of a project. Repeated exposure to extreme temperatures may reduce performance, accelerate wear, and, in some cases, invalidate protections altogether.
These challenges are further compounded by changing patterns of development. This summer, wildfires swept across France, Spain, and Portugal, leading to the evacuation of more than 300,000 people. In the Madrid region, multiple blazes merged into what officials described as the largest wildfire in the region’s history, prompting warnings that the fire was beyond the capacity of firefighters to contain. Meanwhile, in south-west France, more than 200,000 people were evacuated as fires spread through the Gironde region, coming within 15 kilometers of Bordeaux, and threatening military facilities, hazardous-chemical processing sites, and other critical infrastructure. These events demonstrate how wildfires, once viewed as primarily rural events, are increasingly becoming threats to urban and commercial centers.
As wildfire continues its transition from secondary to primary peril, organizational resilience will increasingly depend on combining established risk-management practices with better data and decision-making tools. Traditional approaches remain critical, including vegetation management, fire breaks, and preventative maintenance and diversified sourcing. But equally important is understanding where dependencies exist across operations and supply chains, particularly as wildfire seasons lengthen and begin to overlap with other climate-related stresses. Advanced tools such as climate analytics and weather forecasting can help to support practical decisions around procurement, inventory management, and emergency response, and ultimately minimize loss.