Wildfires pose an increasing threat to the telecommunications industry, disrupting operations, damaging infrastructure, and exposing companies to financial and legal risks.
José Mercado, telecommunications subsector leader for North America and Latin America at WTW, shared insights on the challenges telecom firms face and strategies for mitigating wildfire-related risks.
"Wildfires significantly affect telecom infrastructure, particularly in delivering the 'last mile' of service to customers," Mercado said. "The destruction of towers, cables, and other critical assets often results in high rebuilding costs and service disruptions. These interruptions not only impact customer satisfaction but also lead to revenue losses."
He emphasised that the ability to maintain emergency communication networks during these disasters is vital for public safety, highlighting the industry's responsibility to ensure resilience.
Beyond physical damage, telecom companies face legal and reputational risks linked to wildfires. "In some cases, telecom infrastructure has been identified as a contributing factor in wildfires or has hindered firefighting efforts due to poor maintenance," Mercado said.
“Although many legal disputes have been resolved, the risk of liability remains. Public scrutiny can further impact a company's reputation, making it imperative for firms to take proactive steps to manage these risks effectively,” he said.
One key approach Mercado highlighted was regular maintenance and compliance with state regulations.
"Ensuring that telecom infrastructure is well-maintained, especially in high-risk areas, can help reduce the likelihood of damage," he said. "Companies that align with industry standards and regulatory requirements also minimise potential legal challenges."
Insurance remains a crucial component of risk management, but with some insurers withdrawing from wildfire coverage, telecom firms are considering alternative risk transfer strategies.
"Companies are exploring captives, parametric insurance, and structured solutions as ways to manage financial exposure from recurring wildfires," Mercado said. "These methods provide a more predictable and cost-effective way of dealing with potential losses."
Maintaining strong relationships with local, state, and federal authorities is another vital strategy. "Open communication channels can facilitate quicker access to affected sites for repairs and help manage public perception," Mercado said.
He also stressed the importance of clear emergency response protocols: "Establishing these protocols in collaboration with first responders can reduce operational disruptions and enhance safety measures during wildfire events."
Advancements in analytics and artificial intelligence (AI) are also playing an increasing role in risk management. "Proprietary risk assessment tools, including global parallel diagnostic tools, enable telecom companies to identify vulnerabilities and take preventative action," Mercado said.
"AI-driven insights can improve decision-making, allowing firms to better safeguard infrastructure and maintain operations during natural disasters,” he said.
Wildfires are an unavoidable natural phenomenon, but the telecom industry can take steps to mitigate their impact. "Ongoing maintenance, alternative risk transfer strategies, regulatory compliance, and the integration of AI-driven risk assessment tools will be key," Mercado said.
“By adopting these measures, telecom companies can enhance infrastructure resilience, protect their financial interests, and ensure continued service delivery despite the growing wildfire threat."
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