L.A. Wildfires Highlight Urgent Need for Employee Support and Business Resilience

L.A. Wildfires Highlight Urgent Need for Employee Support and Business Resilience
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This insight is part 02 of 12 in this Collection.

January 30, 2025 14 mins

L.A. Wildfires Highlight Urgent Need for Employee Support and Business Resilience

Forest fire

In the face of the L.A. wildfires, impacted businesses’ top priority is their people. A three-phased approach can help build business resilience and mitigate the effects of future events.

Key Takeaways
  1. Ensuring employee safety and recovery must be the primary focus for people leaders during a disaster such as the L.A. wildfires.
  2. Businesses should build a risk management strategy that includes risk transfer and long-term risk mitigation to enhance employee and property resilience.
  3. How organizations respond to a catastrophe in each phase can help them build future resilience and an employer brand that demonstrates their values.

When responding to natural catastrophe events like wildfires, businesses need to ensure employee safety, provide immediate assistance and ultimately help people to recover. But the economic impact of these events, and their effect on businesses’ coverage needs, cannot be overlooked.

The recent wildfires across the Los Angeles area will likely be among the costliest wildfires ever recorded, with insurance losses expected to exceed $30 billion, according to Aon data. Economic losses not covered by insurance could be much higher, leading to a significant protection gap.

To help companies build long-term resilience, their response to a catastrophe should be considered in three phases: during the event, the immediate aftermath and long-term planning. An organization’s ability to build resilience to withstand future catastrophes depends on how it responds in each phase. Best-in-class risk managers connect property and people strategies, working closely with HR to ensure comprehensive risk mitigation.

Aon’s Wildfire Client Pulse Study, which solicited responses from 119 organizations with employees in the affected areas of the Southern California wildfires, shows that while a majority of organizations did not have a formal disaster response policy, they quickly spoke with employees about their immediate needs and responded with support.

  • 66%

    of companies do not have a formal disaster response policy in place, although some are in the process of developing one.

    Source: Aon Wildfire Client Pulse Study, January 2025

  • 79%

    of organizations reported feeling prepared to support employees during the wildfires despite a lack of formal policies.

  • 82%

    of organizations are reviewing or improving their disaster preparedness plans.

Phase 1: During the Catastrophe Event

To coordinate the emergency response, leadership should immediately convene a cross-functional task force with representation from HR, legal, finance, communications and operations. This is the time to enact any existing emergency or business continuity plans. Those in areas at higher risk for certain types of disasters like wildfires should have specific relevant plans.

Action Checklist:

  • Identify and document the decision-making authorities within the organization. Educate those leaders on the critical decisions they may need to make during an emergency event and their potential implications. Crisis management is a learned skill, and leaders need to be prepared.
  • Maintain communication with local agencies, key personnel, employees, suppliers and contractors to coordinate ongoing response efforts.
  • Monitor alerts and, if safety permits, inspect property regularly, addressing debris removal and fire safety equipment checks as needed.
  • Provide real-time guidance to employees regarding safety protocols, evacuation routes and any changes to working arrangements. Review and adjust leave policies so that workers in affected areas have adequate work flexibility. Just over a quarter (27 percent) of hourly and salaried employees at 119 organizations Aon surveyed with employees in the affected wildfire areas are receiving additional paid leave and 18 percent are receiving a special leave policy such as disaster relief leave.
  • Access and utilize maps or diagrams of critical power shutoff points as necessary during the event. Implement backup power sources to ensure continuous operation of critical systems.
  • Check what health insurance coverage is available for immediate medical concerns. In a wildfire, these could include smoke inhalation, injuries and other acute conditions.
  • Consider making emergency funds available to those affected, potentially through special one-time payments.
  • Ensure the company's emergency response aligns with any relevant government guidelines and recommendations for employee preparedness.
Quote icon

This is where an immediate and cross-functional response is needed — HR, communications, finance and the operating units. The challenge is to coordinate the response among all of these groups so employees are supported consistently and effectively.

Laura Wanlass
Partner, Talent Solutions, North America

Additionally, establishing prompt, two-way communication is crucial. Companies might avoid communicating, fearing they will distract or bother employees during a crisis. However, a lack of communication can make employees feel abandoned. Messages should be sent through multiple channels to ensure delivery.

Phase 2: In the Immediate Aftermath

Once the initial event concludes, companies can begin recovery. Support is critical for employees as they look to recover and rebuild. Meanwhile, firms should inform their insurance broker and insurer of the loss, enabling them to support claim and mitigation efforts.

If you are an Aon client, contact your Aon representative, your insurer and/or independent adjuster to report the claim to insurer(s) as soon as possible. Companies can then focus on developing a long-term risk mitigation and risk transfer strategy to enhance employee and property resilience.

These risk management action items can help guide organizations that may have sustained a loss in the wildfires:

  • Review insurance policies. Examine your schedule of locations, as well as your property policy limits, deductibles, perils and coverages. Determine if your policy contains “Claims Preparation” or “Loss Adjustment Expense” language so that you can engage immediate support to mitigate, manage and measure your loss and obtain reimbursement for those expenses.
  • Confirm property damage if wildfire has spread near facilities. Note if your facilities/property have sustained any damage from the storm, either from wind, flood or below-freezing temperatures.
  • Verify compliance with notice of claim provisions. If you have a claim, report it to insurers as soon as possible. Note if your policies contain a “time-element” exception to a pollution exclusion. This exception refers to the critical window of time that a pollution incident must be discovered and reported to the insurance company to be eligible for coverage.
    • There are two key deadlines to be aware of with “time-element” pollution coverage: The time to discover the pollution incident and the time to report the incident to the insurer. Typically, policies require the discharge to commence on a specific date during the policy period and discovered and reported in writing within a specific number of days — or sometimes even hours. If notice is not given within the specified timeframe, a pollution event may not be covered, highlighting the importance of immediate notification upon discovery of a potential pollution issue.
  • Set recovery priorities. Prioritize the restoration and recovery of facilities, operations and your supply chain, including utilities.
  • Assess the need for claim support. Review the attached description of Aon’s Complex Claims Services for additional information and resources available to you.
  • Be aware of third-party losses. While the most obvious damage is to property and related business interruption, be aware of potential third-party liability losses. Many of the insurance contracts providing coverage — especially time-element pollution endorsements — mandate strict occurrence and claim reporting. Review terms and conditions of these contracts and ensure that occurrences and claims that become known are reported to the insurer as soon as possible.

For a more detailed action plan, see Aon’s Wildfire Preparedness Plan and Recovery Checklist. Also visit Aon’s Natural Catastrophe Resources and Response site for additional information and resources.

Workforce Action Checklist:

  • Develop plans for restarting the business if necessary.
  • Provide mental health support. The trauma from disasters is often overlooked and can have lasting effects. Review and promote employee assistance plan (EAP) services, which often extends to family members of employees as well.
  • Identify illnesses stemming from exposure, such as respiratory infections, and take action to connect employees to necessary care and support.
  • Track the impact of the disaster by monitoring health and disability claims to help the organization quantify the impact so future action can be prioritized.
  • Review and assess environmental effects like outdoor and indoor air quality and mitigate any existing issues.
  • Provide continued schedule and work location flexibility as affected workers return to work while managing the insurance claim and relocation process.
  • Educate workers on available resources. For example, in the U.S., workers can take emergency retirement savings distributions. Additionally, the Small Business Administration has made assistance available to homeowners after several recent catastrophes. Aon’s Wildfire Pulse Survey found that 34 percent of companies either are offering or are considering offering non-financial support, such as workshops to help with filing insurance claims, as well as navigating FEMA relief and legal advice.
  • Review workforce impacts from an equity lens: What areas were most affected and how can the organization drive equitable access to support and care going forward?
  • For any retirees who are not receiving direct deposit, work with an administrator to determine how to get pension income to retirees.
A Multi-Faceted Risk Management Toolbox

With events now happening with greater frequency and in more locations, businesses in areas exposed to natural catastrophes are encouraged to take a proactive approach to managing their risk. This enables informed decision making and the development of tailored strategies aligned with the organization’s risk tolerance.

Key Strategies:

Use a multi-model view of risk. The insurance and reinsurance markets are quantifying their risk appetite, capacity and ability to write heightened exposures in response to events such as the L.A. wildfires. As a result, using multiple models to understand physical risk and inform risk management strategies now and in the future is critical.

Partner with an experienced broker. Working with a broker with a comprehensive catastrophe modeling suite, access to forward-looking climate data, and robust risk and exposure data and analytics at a high granularity will provide a detailed understanding of natural catastrophe exposure.

Review risk transfer options. Businesses can draw on both the traditional and alternative risk markets to find capacity for future catastrophe exposures.

Companies must ensure they understand their current insurance policies and should review their schedule of locations, property policy limits, deductibles, perils and coverages in light of natural catastrophe exposure.

In the commercial property market, there is broadly ample capacity and healthy competition. The impact of natural catastrophe losses on renewals has primarily been limited to local areas prone to this type of exposure. In certain high-risk areas, some insurers have withdrawn coverage. Aon is monitoring the market’s reaction to the wildfires, although losses are expected to be manageable for the commercial property insurance market.

"We would strongly encourage businesses and public entities to think broadly and proactively about potential sources of liquidity post-event,” says Cole Mayer, global head of Parametric Solutions. “A broader suite of tools provides a more flexible and quick response to disruptive events.”

Alternative risk solutions, such as parametric insurance, offer flexibility and speed of payment, which provide an increasingly viable alternative for public entities and businesses. In a wildfire situation, parametric insurance could offer rapid payouts based on pre-defined triggers, such as the burned area footprint of a fire as reported by a publicly available data source. This would allow businesses to quickly access funds to cover operational disruptions and support employees in need.

Parametric solutions also address protection gaps and cover a wider range of economic losses, including non-traditional unforeseeable losses. Coverage can be broad, and a wide array of economic exposures arising directly or indirectly from an event can be insured, including helping employees in need.

Phase 3: Building Long-Term Resilience

Assessment of current and future risks and risk mitigation features can help risk managers identify and prioritize where to make investments.

Work with brokers and carrier risk engineers to implement best practices for wildfire mitigation:

  • Adopt fire-resistant building materials and closed eaves.
  • Create defensible space around properties using a zoned protection approach.
  • Consider active protection, such as roof sprinklers, perimeter/yard sprinklers and exterior fire retardant.
  • Establish comprehensive emergency response plans that include wildfire response.
  • Review Aon’s Wildfire Preparedness Plan and Recovery Checklists for detailed wildfire response preparation recommendations.

Working with local civic government, fire departments and community organizations is also important to stay ahead of wildfire risk and mitigation efforts. Beyond wildfire, businesses should focus on understanding their potential natural catastrophe exposure in the future and direct their risk mitigation investment to build long-term resilience.

Model Workforce Risk to Build People Resilience

As natural catastrophes happen more frequently and in unexpected places, the impact on employees will undoubtedly increase as will human capital-related costs. Many organizations don’t model the potential effect of catastrophes on their workforce, mainly because reporting requirements that demand such modeling tend to focus on infrastructure, supply chain and other property risks. But employers can take these actions:

  • Plan for long-term health consequences. These can be physical health risks like COPD and asthma in the case of wildfires, or mental health risks as people cope with the loss.
  • Partner with an advisor. Choose one with advanced analytical capabilities that can support climate modeling for human capital outcomes.
  • Address long-term financial security. Consider how employee benefit programs support short-term and longer-term financial security so employees are better positioned for future emergencies.
  • Identify and communicate to populations with greater risk. With geographically diverse workforces, the potential effects of disasters on employees vary. While having a dispersed workforce may mean disasters affect the workforce more frequently, it also makes it less likely that any one event will disrupt the workforce as a whole.
  • Train managers. During earlier phases of a catastrophe, middle management will play a crucial role in communicating the company’s response and support programs. Make sure managers understand their role can help build resilience, as managers closest to employees have the most influence.
  • Quantify human costs. The cost to a business is relatively easy to calculate. But the cost to workers may not be. People are the company’s most valuable asset, so determining how to protect that asset — as well as sustain and retain it in the long term — is just as important as protecting the physical infrastructure of the company. Reviewing impacts on employees can help drive proactive assessments of benefits offered and compensation practices, with the goal of developing workforce strategies that mitigate potential future risks.
  • Conduct a formal after-action review. Gather feedback from key stakeholders on what went well and what can be improved upon ahead of future events to help establish operational resilience. Learn from those who have been through previous similar disasters to create a self-learning cycle. This should be an ongoing process.
  • Test and validate. The company's emergency response processes should be evaluated through coordinated exercises. Response plans need to be repeatable and applicable in real-world scenarios.

“Anytime you make a change to a preparedness process based upon lessons learned, you want to conduct a coordinated exercise to test that process and understand if it makes sense in practice,” says Luke Walsh, head of crisis and special risk management for Aon in the United States. “Some actions sound good on paper but can fall short in a real-life situation. Leaders want to make sure that their preparedness planning is both detailed and robust.”

What to do Next

Extreme weather remains a powerful force driving complexity and volatility for both businesses and communities. Weather-related events are becoming more frequent and costly. Talk to a risk advisor for advice and solutions that can help your organization manage risks related to wildfires and other potential natural catastrophes.

Key Contacts

Madeleine Catzaras
ESG People Solutions Leader, Health Solutions Europe,
the Middle East and Africa
[email protected]

Jill Dalton
Group Managing Director, Property Risk Consulting
[email protected]

Melissa Elbert
Partner, Wealth Solutions, North America
[email protected]

Megan Hart
Managing Director, U.S. Reinsurance Catastrophe Analytics
[email protected]

Dan Hartung
Managing Director, U.S. Reinsurance Catastrophe Analytics [email protected]

Ellie Hawkins
Associate Partner, Wealth Solutions, North America
[email protected]

Patrick Kelly
Head of Climate Analytics, North America
[email protected]

Grace Lattyak
Partner, Wealth Solutions, North America
[email protected]

Cole Mayer
Global Head of Parametric Solutions
[email protected]

Kembre Roberts
Senior Vice President, Health Solutions, North America
[email protected]

Katie Sabo
Senior Managing Director, NPG Public Sector, North America
[email protected]

Luke Walsh
Head of Crisis and Special Risk Management, North America [email protected]

Laura Wanlass
Partner, Talent Solutions, North America
[email protected]

Ben Batho
Data and Analytics Leader, Health Solutions, Europe,
the Middle East and Africa
[email protected]


General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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