Some insights from HDI Risk Consulting, after a busy wildfire summer in North America and Europe.
Fluctuating climate conditions are creating interconnected risks across Canada’s Boreal Forest. Risks affecting the forest do not stop at the fire line or at the forest’s borders. Heat stress, prolonged drought, wildfires, water scarcity, and permafrost thaw can compound one another. These physical risks put pressure on forest health, remote infrastructure, and the supply chains that support Canada’s resource-based economy and beyond.
HDI Risk Consulting (HRC), a wholly owned subsidiary of Corporate & Specialty insurer HDI Global, has assessed physical climate risks affecting the Canadian Boreal Forest using HDI ARGOS 4.0. HRC’s analysis visualizes location-specific climate risks, evaluates potential economic as well as operational consequences, and identifies measures to strengthen resilience.
Stretching from Canada into Alaska and the northern United States, the Boreal Forest connects forestry, mining, energy production, transport infrastructure, and remote communities across North America. A single severe event can affect multiple sectors and countries simultaneously, creating disruptions that extend well beyond the area directly impacted.
“Climate risk moves through interconnected systems,” said Wiebke Cundill, Team Lead Natural Hazards and Climate Risks Analysis at HDI Risk Consulting. “The Boreal Forest is a clear example of that interaction. By mapping these risks with spatial precision, we help organizations understand the operational stakes for infrastructure, continuity, and long-term investment decisions.”
Cascading Climate Risks Affect Infrastructure and Supply Chains
Higher temperatures are increasing evaporation and reducing soil moisture. This can weaken tree growth and resilience to pests and disease, reduce carbon uptake, and increase flammability. For companies operating in the region, heat stress can contribute to reduced forestry productivity, higher costs for water supply, and fire protection, as well as increased operational challenges. Rising demand for cooling may also add pressure to local power supplies. Moreover, prolonged drought can increase tree mortality and desiccate wetlands. Water shortages may restrict operations at mining, energy, and industrial facilities, while declining water levels and flows can reduce hydropower generation. In some regions, declining water levels and changing water quality can increase treatment costs.
Wildfire is among the most acute risks. In 2023, more than 15 million hectares burned in Canada, which is around seven times the historical average during an El Niño year and approximately the size of Greece. Repeated large-scale fires can impair the regenerative capacity of the Boreal Forest, damage peatlands and peat soils, and release additional carbon. Concurrently, fires can interrupt production in forestry, mining, and oil and gas; damage roads, railways, pipelines, power transmission lines, and other critical infrastructure; and disrupt key export corridors.
As many mining, energy, and forestry operations are in remote, forested regions, a localized event can lead to wider supply-chain impacts. The economic effects can be pronounced. The Fort McMurray wildfire in 2016 illustrates the potential scale of these losses. The event caused approximately CAD 7.2 billion in total losses, including around CAD 1.9 billion in business interruption losses. The Jasper wildfire in 2024 also disrupted the CN Rail network and delayed freight movements to key export ports, including Vancouver and Prince Rupert. 7.9% of regional economic output was affected by the Jasper wildfire. In Edson, the figure reached 10% in 2023. The full economic impact may be higher still, as smoke exposure, health impacts, ecosystem losses, and indirect supply-chain disruption are not always fully captured.
“Wildfires can cause substantial business interruption, even when an industrial facility is not directly damaged,” said Dr. Nina Lenz, Risk Analyst Natural Hazards & Climate Risks at HDI Risk Consulting. “When a rail line, road, power connection, or workforce is affected, the consequences can quickly spread throughout regional and international supply chains.”
In northern regions, permafrost thaw can have similar effects on infrastructure networks, increasing transport costs, delaying deliveries, and disrupting the movement of raw materials.
A North American Risk, Not Just a Canadian One
The Boreal Forest extends into Alaska and the northern US, and the resource flows it supports are tightly linked to American industry. A wildfire in Canada can quickly become a US business problem.
- Cross-border supply chains: Canadian lumber, energy, and minerals feed US manufacturing and construction. Rail disruptions delay US-bound freight, like those following the 2024 Jasper wildfire.
- Shared export corridors: Ports like Vancouver and Prince Rupert handle goods bound for US markets and disruptions there mean delayed inventory and higher costs for American buyers.
- Energy interdependence: Canada supplies significant crude oil, natural gas, and hydropower to the US. Wildfire-driven outages or reduced water flows can tighten US-side energy supply and cost.
- Smoke and air-quality spillover: Wildfire smoke regularly crosses into the northern and midwestern US, affecting public health and outdoor-dependent industries far from the fire itself.
“These risks don’t respect a map line,” Dr. Lenz said. “A wildfire in Alberta or British Columbia may appear elsewhere as a delayed shipment, an interrupted energy connection or a production slowdown. That is why companies need to assess their own sites as well as the infrastructure and supply-chain dependencies their sites rely on.”
Measures to Strengthen Resilience
The risks identified in the Canadian Boreal Forest highlight the need for integrated measures that consider forest health, water availability, critical infrastructure, and business continuity together.
HRC’s assessment identifies opportunities to strengthen resilience, including:
- Climate-resilient forest management: Promote site-adapted mixed forests, restore wetlands, and monitor forest health, soil moisture, and pest activity.
- Water and drought preparedness: Protect and rewet peatlands and wetlands; diversify water sources and assess future water availability in site-planning and investment decisions.
- Wildfire risk reduction: Expand monitoring and early-warning systems; establish firebreaks, strategic vegetation management, and integrate Indigenous land-management practices.
- Protection of critical infrastructure: Manage vegetation and create defensible space; strengthen infrastructure against fire and heat impacts.
- Permafrost-adapted asset management: Monitor permafrost temperatures and ground movement; use reinforced and adaptable foundations; integrate thaw-related risks into maintenance and investment strategies.
- Business-continuity planning: Diversify transport routes, establish redundant energy and communications systems, regularly test crisis-management plans.
“Effective resilience planning requires a view across the entire risk landscape,” said Klaus Navarrete, Managing Director, HDI Global Canada. “By combining physical climate data with an understanding of operational dependencies, companies can identify where risk is concentrated, prioritize preventive measures, and reduce the likelihood that a local event becomes a wider business interruption.”
Turning Climate Data Into Action
The Canadian Boreal Forest exemplifies the importance of climate adaptation as an environmental imperative. For organizations that depend on natural resources, remote operations, and critical transport networks, climate adaptation is also a business necessity. It helps safeguard investments, protect business continuity, and build more resilient supply chains.
As part of its Iconic Landmarks series, HRC applies advanced analytical tools, including HDI ARGOS 4.0, to identify climate-related risks and make them tangible at an early stage. Combining precise data analysis with practical risk assessment can help businesses and public authorities understand local vulnerabilities, strengthen economic resilience, and prepare locations for future challenges.
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