The Insurance OG of Prevention; Technology Can Starve Wildfires of Fuel

A focus on prevention is just as critical to the success of a nearly 200-year-old property insurer, as it is to a robotics startup that eliminates the fuel that allows wildfires to spread. In this episode, Pete talks with Randy Hodge, executive vice president, staff insurance operations for FM Global, and Anukool Lakhina, CEO and co-founder of BurnBot and co-founder of Wonder Labs, about how each organization applies research and technology to proactively mitigate climate risks and make businesses and communities more resilient.

Segment 1: (01:52) Pete and Randy discuss how FM Global was founded on a belief that most losses are preventable, the benefits of pairing risk engineering with research, ideal customers aligned with insurer's philosophy of loss prevention, creating resilience credit to mitigate climate risk exposures, expanding suite of climate risk data and insights, adopting aerial imagery and AI for remote risk analysis, and the importance of investing in research to stay ahead of evolving risks.

Segment 2: (27:59) Pete talks with Anukool about the origin of Wonder Labs in personal experiences with wildfires, charting the intersection between disasters and emerging technology, using BurnBot’s advanced robotics to scale fuel treatment, the imbalance in resources for prevention vs. recovery, increasing investment in wildfire prevention innovations, and how insurance can incentivize fuel breaks and fuel treatments to harden landscapes.

Randall Hodge - FM Global
Randall E. Hodge
Executive Vice President, Staff Insurance Operations
FM Global
Anukool Lakhina
Anukool Lakhina
CEO and Co-Founder
Show Transcript

Pete Miller [00:00:03] Hi, I'm Pete Miller, president and CEO of The Institutes. We're a global not for profit whose mission is to educate, elevate and connect the people focused on risk management and insurance. You're listening to Predict & Prevent, a podcast that explores how technology and resiliency can prevent losses before they occur. In each episode, we learn about innovative solutions and hear from leading experts on how they are making these approaches a reality today. Welcome to another episode of Predict & Prevent. Today, we feature two leaders who are helping their customers prevent losses and disrupt lives, businesses and communities. My first guest is Randy Hodge, executive vice president of Staff Insurance Operations for FM Global. Randy joined FM Global in 1990 as a field engineer focused on loss prevention and consulting with clients to identify and prevent losses. In his current role, Randy oversees all staff operations worldwide, from engineering and research to innovation in analytics to underwriting and client services. FM Global was founded on the premise that risk engineering can prevent big losses and make insurance more affordable. According to Randy, his foundation remains largely unchanged after nearly 200 years. We discussed the importance of investing in research and data to predict and prevent losses, especially around addressing climate risk and how to spread that expertise more widely. Randy, thanks for your time. Really appreciate taking time out of your busy schedule to come and talk to us about a company FM Global. It's certainly been in Predict & Prevent for quite some time. 


Randy Hodge [00:02:02] Great to be here. Thank you. 


Pete Miller [00:02:03] Can you share with us a little bit about FM Global and your philosophy and what's I think is quite an interesting history. 


Randy Hodge [00:02:12] Sure I'm happy to do it. Yeah. And again, thanks for having me on. I appreciate it. For FM Global perspective, our unique philosophy is based on a simple premise, and that is that the majority of loss is preventable. It's preventable through applying sound engineering and science based principles. And a lot of the loss that's experienced out in the industry can be avoided by an application of these principles. And we're a research and science based organization. So we are designed to understand the hazards that can threaten business and provide solutions ideally before losses start occurring. If you look at our founding of our company, it started in 1835 by a mill owner, a textile mill owner just down the street here and outside of Providence, Rhode Island. And he was an engineer, a science based individual. And at that time, textile mills were having very frequent and severe fires. And he thought if he could put some features in place, such as more substantial construction, some basic fire prevention programs, having some water around to put out fires, should they occur, through those efforts instead of big fires and explosions being acts of God. They were controllable. And he put together a set of principles to do that. He went to his insurance company and said, "Look, because I'm doing these things, I should benefit from better rate structure." And they basically told them, "No, the good risks have to pay for the bad. That's too bad." Now, he wasn't satisfied with that, so he partnered with some other mill owners, like minded mill owners, and they all agreed that if we share in these basic loss prevention measures, we can ensure each other and have better, more affordable insurance and at the same time less losses. And that was the genesis of our company. And though the world's gotten a lot more complex, our basic business model has not changed significantly in nearly 200 years. So again, that philosophy, the majority of losses are preventable through the application of science based standards. That's our whole philosophy. And to sum it up in our history, that's how I started. 


Pete Miller [00:04:11] So, Randy, genius is often simple, right? I mean, that's a genius idea to me. Obviously, execution or culture or something else has made that model really hard to replicate. So I'm curious how you look at that. It's a it's a great idea. You've done it really well for a long period of time. Why is that so hard to replicate? 


Randy Hodge [00:04:34] Yeah. No, I make it sound easy because you just say, if you just play, [00:04:38]apply [0.0s] some science based standards, you can avoid loss. But where do these standards come from? Where do you get the resources? And one of the cornerstones of our business model is we do our own research and testing. We have over 100 PhD scientists on staff. Their job surely is to do research into emerging hazards, to write our client solutions before a bad event can happen. And we operate the world's largest fire and explosion testing center, also the testing center for natural hazards, equipment breakdown, and all the myriad of perils that can impact a property from having a big event. We invest tens of millions of dollars a year in research, so the research based standards our people actually produce. And that can be applied and used for our clients globally throughout the world. That's a key differentiator. Another one is we also have a group that when research identifies an issue in a need, we have an approved products group. They can go out to industry manufacturers and say, "Look, we need, for example, a recent approval. We need solar panels that can be roof mounted that are not going to catch on fire and burn a building down because we saw a large wave of solar mounted roofing panels catching buildings on fire." And now we have three of them so we can take research of the hazard into solutions, into products that our clients and quite frankly, anybody in the street could use. We're a mutual company. Our owners are our clients. They're one and the same. And so all the money that we make goes back into investing and understanding these hazards and helping our clients understand these hazards so they can make good decisions. Those are things that are very unique. Being a mutual gives us a lot of flexibility to do that because we're not reporting to Wall Street on a quarterly basis about thin margin profits that we're trying to maintain. We can take our client's money and invest it in ways that will benefit them in the future. And we have engineers all over the globe. So we have engineers living in all parts of the world where our clients do business regularly going to their facilities. They understand their business extremely well. They're integrated into the processes, they understand the particular hazards, and they have really good relationships with the people on site to get them to have the dialog about these hazards so the clients can understand them and take action. So those are just a few of our differentiators. Yeah, it sounds really easy, but it is very difficult to replicate and having the research capabilities and the technical expertise as a very hard barrier to entry and one that we've got a very good track record on. 


Pete Miller [00:07:16] You mentioned that FM Global is mutual and they have clients all over the world. So I'm interested and curious, is there like a particular ideal client or things that you look for? Who do you want to partner with? 


Randy Hodge [00:07:33] Absolutely. Yeah. First and foremost, we start with clients that we would say we use the term philosophically aligned, philosophically aligned on the premise that we're in business together to help prevent and mitigate losses, predict what's going to happen to head it off before the loss occurs and avoid disasters from happening. And sometimes that takes investment. And companies that are willing to understand that risk and invest in the solutions to prevent the loss from happening. That's first and foremost for sure. Clients that are very concerned about their reputation are good online partners. People that are more interested in avoiding a loss than procuring insurance to transfer risk. And so that mindset aligns really, really well with us. Sometimes clients that have actually been through a big event, maybe they had a big flood in their past and they never had the advice on how to prevent it or mitigated it. We have a story in our our annual report, the end of our 2021 annual report, a company called Coca-Cola Bottling Consolidated. They had a location in Tennessee, a number of years ago that had a severe flood. We weren't their partner at the time. We partnered with them several years ago, discussed with them ways in which they could mitigate that flood by the and by the way they put in certain flood barriers on their site, relocated some pieces of critical equipment at a very low cost economically. And then two years ago, they had the same flood again. And they will tell you, instead of it being a disaster, it was a minor distraction. They were up in business the next day. So clients that have been through those events in the past don't want to repeat it and they're really open to the advice. So we have less than 2000 clients in the mutual. We're actively looking to grow that at a very slow and steady pace with like minded companies out there that want to become part of the mutual. And the clients that do adopt it, we end up with some very, very long term relationships. We have a dozen clients now that we've been partners with in excess of 100 years or average tenure of our client. Over half of our client base by number have been with us over 20 years. So it's a long term philosophically mutually beneficial relationship that we look for, and we invest a lot of time upfront getting to know the companies. But typically when we partner, it's a long lasting relationship, all predicated on that mutual desire to prevent and mitigate loss together. 


Pete Miller [00:10:01] That's a that's an amazing statistic. I know our organizations has some partners for more than 100 years, but you don't often see that. 


Randy Hodge [00:10:08] You don't and you don't often see the same companies around for hundred years, much less being a client of together. So, yeah, really proud of that achievement. 


Pete Miller [00:10:15] So what other incentives I mean, the idea, you know, what you're saying makes complete sense to me, right, a philosophical alignment. Let's not have a loss. That's a pretty good story. Are there other ways that a mutual helps you incent folks to get involved in these kind of efforts? 


Randy Hodge [00:10:31] Yeah, absolutely. Again, our clients are owners. So if you were to make an analogy for a stock company, the shareholders are the owners. So when the main company does really, really well, the shareholders benefit by dint of dividends or increased stock price or stock buybacks, things of that nature. As a mutual when the company is very successful and we don't have big losses and we do have excess profits, we give that back to our mutual owners, we give that back to them by what we consider what we call policyholder credits. So for some of our clients that are excess of 20 years of tenure, which half of them are, they get a 15 percent credit after renewal premium when we issue in membership credit. And since 2021, at the end of this next cycle, we'll have given our clients back more than five billion dollars of returned credit. And the beauty of that is many clients reinvest that in their own risk quality so that money doesn't necessarily just go back into their pockets. That goes into them investing in hardening their risks and their other and protecting their assets. 


Pete Miller [00:11:40] It's pretty amazing. Culture matters, right? Organizational and long term relationships, particularly in this business. 


Randy Hodge [00:11:46] You couldn't be more right. 


Pete Miller [00:11:48] I understand that last year, FM Global introduced 300 million dollar resilience credit. Can you? And the idea is your partners will reinvest in making their businesses more resilient. So in addition to the credit you just talked about, I assume this is a different program. Can you tell us tell us how that program works and how members are using it? 


Randy Hodge [00:12:09] Yeah Pete, that's a great, great question. Thank you very much. Yeah. So the membership credit is what I talked about, and that's a tenure base credit base on our our financial performance. Last year for the first time, we initiated an additional credit, what we call the Resilience Credit. The Resilience Credit, the first one was geared towards incentivizing clients to invest in their own climate related resilience, resilience against physical perils from things such as flood, wildfires, wind, hurricane, freezes, all the things, some natural hazards that can impact a client. We released a new suite of tools. We call it our Climate Resilience Suite. And within there we outline for the client. Actionable things they can do to increase their physical risk against certain climate related peril. We provide to them what those issues are, what they can do to fix it, what it will cost to fix it. And we all stats are analytics give a priority of which ones will have the biggest impact and have the most likely likelihood of occurrence. And then in addition to that, we also gave them money five percent against the renewal premium, specifically apply and invest against those items that's in their what we call their climate risk report. So we were excited to deliver that last year. We initiated on October 1 of 2022, and the clients that go through the renewal will get that all the way until the end of September this year. We hope to do those more and more in the future, and that really gets even more so to the mutual benefit aspect because you think about it, if our clients benefit and they don't have the loss, the mutual benefit more financially, thus we'll have more credits to get back to our clients and they'll have more money to reinvest in their own resilience. And you can see that's mutually beneficial cycle  perpetuating for in a very healthy way are both for both of us. And I think and this one in particular, when you look at the climate impact, the frequency and severity of loss has just been on the rise, especially the last five to ten years. And you look at many of these events, they impact widespread areas and the areas that they impact impact communities. They impact hospitals. They impact companies, like I said, that make pharmaceutical. They impact companies that supply our heat to our homes, impact companies that make food. And by they're being resilient and being able to operate after a disaster to their communities that need them is a gigantic win. And the fact that we're contributing to that is really as a mission based company, really helps motivate our employees and and breeds a lot of loyalty and engagement with our clients. So thank you for asking that question. That's something that's working really, really well, right? 


Pete Miller [00:14:59] Yeah, that's an that's a very interesting program. When I was reading about it, I don't recall hearing such a program ever, frankly. 


Randy Hodge [00:15:06] No, we and to be honest, we had to really sort through how we were going to do it, and that was a fair way to do it and tie it to the climate resilience was just a real natural fit. 


Pete Miller [00:15:15] So you talked a lot about challenges of climate risk. Are there other ways and you mentioned some, but are there other ways that you're helping your members with climate risk? 


Randy Hodge [00:15:26] So one of the cornerstones I talked about was our our climate risk report, where we outline this  actionable things they can do to mitigate the physical risks from climate impacts today. In addition to that, if you start from a bigger picture perspective, we have what's called the Resilience Index, and that's available to anybody who goes onto our website Resilience Index. And it gives us scoring by the different geographies within the world and how they relate to their overall resilience to loss. In there over the last two years ago, we added features on there that allow people to understand the climate related risk that they face in those various territories. So even a non-client we see the usage on that non-client use it as much as our clients do to understand it. So that gives a big picture of the type of things you should be concerned about. For existing clients, we have the climate risk report I talked about and we just released what is known as the Climate Change Impact Report. So our research team were through our team of climate scientists, came up with ways to predict where our client's footprint is right now, what the impact of climate change will have in 2030 and 2050. So it talks about things such as extreme precipitation leading to localized flooding, impact of sea level rise, wind speed changes, extreme temperatures and extreme drought leading to more frequent severe wildfires. And those are provided to our clients. So they with the Climate Risk Report they know what their risk is today. The climate change impact report will show them how it evolves in the future so they can make good decisions about how they want to invest as they grow and expand and operate throughout the world. You can imagine if you're going to be starting tomorrow and building a building that you think has an expected useful life of 50 years, you're interested in what it looks like today. You're also interested what it's going to look like in 2050. So we provided that as well. And the last thing that we added to our suite of climate tools is a it's called the Climate Reporting Job Aid. And all the data that our engineers have collected and our clients locations for decades on natural hazards. It turns out that the vast majority of the data that clients need to report on for the impact of climate change on their physical resilience and how climate change is impacting them, we provide a much a vast majority of that data and we can summarize and give it to our clients and we show them how they can report on it, especially outside the U.S. as more and more regulatory bodies are asking clients how they're dealing with climate change impacts. 


Pete Miller [00:18:06] Well, I imagine that's a big value add because, as you say, compliance, especially outside the U.S., is is getting very much stepped up. And that's an expensive proposition, right? 


Randy Hodge [00:18:16] It is. We had to do it ourselves for our license in Singapore and we published that, and it is a major undertaking and it turns out the data we have was instrumental in putting it together because we are a client of ourselves and we we have all the data. We hold ourselves to the same level as our clients where we operate. And so we had all the information we needed to make a really good report. 


Pete Miller [00:18:37] So let me switch gears for a sec. There's been a lot of advances in technology recently, and I think what our premise is that you can capture and analyze data faster to prevent potential losses, sometimes even in real time, especially when we're seeing, as you said, increasing frequency and severity. So what are some of the things that FM Global is doing around that? 


Randy Hodge [00:19:03] In addition to our engineers going out to client locations, we have a lot of client locations that are we're not able to get to immediately. And we've developed a tool using aerial imagery combined with artificial intelligence. And we've trained the imagery through artificial intelligence to look for climate related perils that we can get, that we can get from visiting the site. For example, we've trained the model to look like an engineer, to look at a location. We can overlay whether or not it's in a flood zone. We have flood maps that show roughly how deep the water is going to be where that client is exposed. Our aerial imagery can pick pinpoint all the different elevations in the client location and predict how much water will go into the building. From there, we can develop what the loss impact will be to the client and we can share that information with them more quickly than we can by sending an engineer out. We've done the same thing for wildfire. We can quickly assess areas that we know are in wildfire zones. We can differentiate how close they are to the vegetation, how tall it is, how dry it is, whether it's normal landscaping, whether it's actually dry brush. And we can give an exposure assessment to our clients as well. And now we're even training the models to look at roofing systems in hurricane zones and look at fascinating patterns of roofs to see whether or not they've got vulnerabilities to wind up left. Again, this is just to do that before our engineers get out there. And for client locations that are not of significant value or size for us to send an engineer out to practically. So it expands our capabilities and gets our information to our clients much [00:20:38]quicker at. [0.1s] And that's just one of the tools that we've developed that we've been using right now. And it's getting a lot of good use to our teams. 


Pete Miller [00:20:45] You answered earlier about your Resiliency Index and a series of reports that those are generally available. Some of those are and then some are to members. Is that correct? 


Randy Hodge [00:20:56] Yes, that's correct. The Resilience Index is available to anyone. The engineering standards and the approved products that I've mentioned to you that we've approved for safe activation to protect client facilities. Those are all publicly available. So our engineering standards that our our research comes up with and producer standards, for example, of how to design against hurricanes. Those are publicly available. And so are there approved products in addition to the Resilience Index. But there are also some other products, of course, only our clients are going to have because it requires a more intimate understanding of their business. For example, in addition to the climate tools we talked about, we've had for several decades what we call our risk mark, benchmarking and scoring system. And that gives the client a relative risk score of things that impact their facilities from fire, natural hazards, mechanical, electrical breakdown and human element factors, and that gives them a scoring system in terms of where they are. It gives them a score of where they can be, and it helps them prioritize risk mitigation. In addition to that, we also provide them a suite of analytics tools that help them understand also where to prioritize, like for example, in our risk benchmarking system. If you just divide up all of a client's locations into four buckets, the first [00:22:26]quart [0.0s] top quartile being good risk, the bottom quartile being the poorest risk, we can show them that if you're in that bottom quartile, you're seven times more likely to have a loss. And if you do have it, it's 30 times more severe. And we can demonstrate that sort of analytics. For the equipment factors, there are certain facets of equipment factors that we look at. And if they're triggered, we know that the loss is five times more likely to happen. We can point that out to our clients. And another example is we do sort of a a ranking of all of our locations from a risk quality standpoint and of the locations we physically visit, about 60,000 of them. The top 1000, roughly the top two percent represent about 30 percent of our large loss. So by those different metrics and analytics tools, we can really triangulate into our client for our clients where they should focus and invest first to prevent loss, identify the losses that are most likely to occur and then to guide them towards the solution that can help them avoid it. 


Pete Miller [00:23:30] When you look at current risk landscape, what do you see that we could add? What do you see as things that could be done? 


Randy Hodge [00:23:39] I think the biggest challenge right now is the fast pace of industry changing. And what's happening is as many things that are happening in the world that are that are really good and better for the world. Inadvertently new hazards are created along with that. That's just we've seen that for 200 years. Now, I'll give you an example. Decarbonization. Fantastic. Everybody's moving on that path at the same time with that, it creates some hazards. The need for more green buildings leads to development, say, better building insulation systems. But we see those insulation systems on buildings leading to very large, preventable, big catastrophic fires like a Grenfell Tower, for example. There was a lot of desire there to have a very green building that was more energy efficient and inadvertently created a hazard that led to a very, very big impact wafts out of that. We know those materials have impacted the food industry for decades, but the fact that it's being applied to other segments of the world that are entitled to ever building types are an evolution of that in the decarbonization trend. Look at renewables. From renewable standpoint, fantastic. It is such a smart thing to do. And when you do it, when you went back to the Houston trees a couple of years ago, the power grid was extremely vulnerable because the turbines didn't have the proper freeze protection on them. So those were types of things that it was a really good idea. It was well thought out other than the fact that the hazards weren't identified, that could have been preventable by a very small additional cost to have freeze protection on those. And where I think we're going in the future is with Quantum computing computing, we're seeing the development and rapid development of new materials and new technologies, passion we've ever imagined. With that, there's going to be new hazards emerge. So again, I think the focus on research and understanding upfront versus waiting for the loss to occur after the fact is in need of significant investment. You look at artificial intelligence, look at ChatGPT. And I think what could emerge there is different threats to companies from the cyber angle, and cyber angle, not from stealing your data, but from going in and taking over your equipment or taking over your operations or bypassing safety features that can lead to catastrophic loss. So all these new technologies just have to be thought of, of a lens of they're going to make the world better. But along the way, there's going to be some new hazards that are created that we're going to need to have solutions for. 


Pete Miller [00:26:15] Well, I'm pretty confident, given that for 200 years, FM Global has done a fabulous job of first recognizing great philosophy and sticking to it and making changes consistent with that philosophy and adding value, certainly as customers that you'll be right at the forefront of changes going forward for sure. 


Randy Hodge [00:26:38] We like to think ahead of the loss before it occurs. 


Pete Miller [00:26:41] Absolutely. Randy, thank you so much for your time. This is this is quite insightful and very helpful. So I appreciate you taking time out of your busy schedule to be with us. 


Randy Hodge [00:26:52] Thank you Pete. I'm happy to do it. 


Pete Miller [00:26:57] It was such a pleasure to speak with Randy. I found it particularly interesting to hear that FM Global shares its natural catastrophe hazard data openly for others to use. This shows a unique dedication to risk prevention for everyone. My next guest is Anukool Lakhina, CEO and co-founder of BurnBot, an advanced robotics solution dedicated to preventing wildfire losses. Anukool has a Ph.D. in Computer Science from Boston University and founded a data analytics company called Guavus, that was acquired in 2017. In our discussion, Anukool and I get into the role technology plays in scaling wildfire prevention efforts. We also discuss the importance of managing fuel for wildfires to reduce the peril. In Anukool shares how Wonder Labs, a climate risk research organization he co-founded with his wife, fosters community centered conversations around innovation. Anukool, very happy you're here with us today. Thank you so much for your time. I think, done a little, obviously done some research. Very interesting what you're done. Can you just share a little bit about your background and how you ended up founding Wonder Labs? 


Anukool Lakhina [00:28:12] I co-founded Wonder Labs with my wife, Shefali. And so as background, I'm really a tech entrepreneur and Shefali is really the policy and disaster risk reduction specialist. My formal education and training was in computer science. I got my Ph.D. about two decades ago. That sounds like a lot, but this feels like yesterday. I commercialized my PhD work into a data analytics company, which I built over ten years, really doing large scale data processing and AI systems selling to telecom operators around the world. Shefali spent a decade with the United Nations, actually including with the Secretariat for Disaster Risk Reduction in Geneva. And then she also worked around the world in South Asia, North Africa and South East Europe, Australia and also the US really working on disaster risk reduction both at the policy level, the programs level and the research side. And then she got her PhD studying bushfires and the natural hazards in Australia. The two of us kind of bring different backgrounds and we decided to kind of create Wonder Labs and team up really in 2020 and the beginnings of the pandemic because we experienced the impacts of wildfires. So in 2018, there was a pretty destructive wildfire here in California. The campfire, the town of Paradise was burned. And even though we were about 150 miles away in the Bay Area, that was really our first real visceral encounter because we were smoked out for two weeks. Very similar to what you are experiencing and what you know, our East Coast friends have experienced recently with the Canadian wildfires. And then, you know, that 2018 event really sensitized us to wildfires and then we witness them again in 2019, in Victoria, Australia, and then, of course, in 2020, we had wildfires all around us, even here in the Bay Area in California, we went from what is wildfires to here they are again. And it really hit home for us. So in 2020, in the pandemic, as I mentioned, when we I guess all had some time to think, we decided to create Wonder Labs with the mission to really catalyze innovative ideas, both technologically social ideas, ecological innovations with communities that were on the front line of wildfire impacts. 


Pete Miller [00:30:36] Yeah, fascinating. I was actually out in California right around the time of the camp fire, and had to go north of San Francisco. And yeah, that was pretty amazing. And obviously for the insurance industry, there were a lot of learnings done there. I'm looking at your website, you kind of have a matrix of how you approach this, right? The different stages. Could you just talk about that? What does that look like and how do you frame this problem? 


Anukool Lakhina [00:31:04] Yeah, absolutely. The State of Fire Tech was a report we put out last year, and that was really our sense making of what are the challenges still to be solved in the wildfire space. And the way that we looked at that was just to organize all the innovation that we were seeing and also all the areas that were ripe for innovation. We thought it was useful to have a framework that looked at the space, on the one hand, a disaster lifecycle perspective consistent with how disasters have been studied. Look at wildfires really as that, and then the different stages then become really one around preventing disasters. So before even there is a disaster, what can you do to prevent it mitigate it? But then the next phase from there is how do you detect these disasters as they're happening from there? How do you respond to them? And then finally, how do you recover from them? So we felt like organizing the world with that kind of as one dimension, the disaster lifecycle stages. And then the other dimension really being where we felt there were, I would say, universal technology trends that were emerging. So everything from data and AI innovations that are going on, robotics, mechanization, innovation, materials, science, research. And so we found it useful to look at this space by organizing it in this two by two grid, if you will, with the columns really representing the different stages of the wildfire disaster prevention, detection, response and recovery, and then the role representing these different technology trends, our technology innovations and how they could be applied in that matrix. So that was really our sense making exercise, if you will. But we found that to be a really useful template to highlight where innovation can play a role and also where the gaps are. 


Pete Miller [00:32:57] And I can say I would encourage everybody listening to go look at that because it made a lot of sense in a graphic to me. So I thought that was very clear the way you guys laid that out. You're also the CEO of a startup called BurnBot. So can you tell us what is it, how does it work and how you see it helping prevent catastrophic wildfires? 


Anukool Lakhina [00:33:18] Yeah, in fact, one of our early investments in Wonder Labs was a new kind of technology to suppress wildfires. That's how we started. And that's how I met Lee Haddad, who's my co-founder and our chief technology officer at BurnBot. But we were working on a completely different area. This is how innovation usually happens. We were working on technology to suppress wildfires, and then we realized that, hey, the best way to fight these big fires is to make sure they don't start. The old phrase "Prevention is better than cure". And so we decided to really focus our efforts on treating fuels, beating dead vegetation and treating hazardous fuel loads, reducing them and removing them, and in so doing, prevent destructive wildfires from destroying our communities and our habitat. So BurnBot's mission is really to prevent destructive wildfires, a scaling fuel treatment. And so what we do is we build and operate machines to really amplify our capacity and make fuel treatment more scalable, more precise, more predictable, more ecological, safer, and also all better. So you can start envisioning really scaling our fuel treatment efforts, because the [00:34:31]thesis [0.0s] is if you treat the fuels and if you take out the fuels, the fires don't have anything to consume. There's a very direct relationship between treating fuels and reducing wildfire risk. 


Pete Miller [00:34:42] Yeah, and I think that's part of what we're trying to say with this podcast is to predict and prevent. So as you say, kind of our corollary is the best loss is the one that never happened in fire. Definitely, you know, you know, much better not, [00:34:55]do you [0.1s] need fuel. So I'm curious who does BurnBot see as their target customer? Is it businesses, local governments, individual homeowners? Who do you see as the target customer for that group? 


Anukool Lakhina [00:35:08] Yeah, it's actually all of the above. And when we decided that there was a business here, you know, what we really found was that the scale of the problem is really huge. You know, estimates put about 200 million acres just in the US alone that need to be treated. Our current capacity is in the two to three million acres. From an addressable market perspective, there's a lot of acres that need this treatment. The key is how do you build and how do you scale to that. So from a customer prospect, those acres really fall in basically four different segments, if you will. The first segment are the big infrastructure providers. So critical infrastructure like utilities, transmission lines, both sides, highways, lines, railroads. And the goal over here is to reduce ignitions. We've seen power companies, utility companies really struggle with triggering wildfires. And so if you can treat the vegetation around them, you can reduce the ignition risk. So that's one bucket of customers, if you will, on the infrastructure side. You are correct that also local state and federal agencies and land managers do fuel treatment and do vegetation management and VCR rule over there really is amplifying their capacity by providing technology to really allow them to treat in areas that they couldn't do because today's treatment methods are not very precise. They're also very labor intensive. So we think our machines and our technology can really amplify their workforce and really allow them to get to some of the ambitious targets that have been set in some of the new funding that's come in from the Inflation Reduction Act and others outside that. Also private timber companies, private specialty agriculture, like wineries who have all witnessed firsthand and have an existential risk to their business if a fire comes through and consumes their core assets. And last but not least, private property owners, homeowners, HOAs, towns, municipalities, communities, we have increasingly seen fires come in, in open spaces and go into structures. And it's not just about hardening structures. We need to be treating landscapes also. So what we're finding is property owners, HOAs, town. Those are also investing in vegetation management and fuel treatment. 


Pete Miller [00:37:30] Yeah. So this is fascinating to me because the statistics you gave are pretty startling, right? 200 million acres, I think you said are possible and two or three is currently being done. So 100x problem. So I'm curious if we're saying wildfire tech is focused on detection maybe less on prevention. Given those numbers, and what could we do to drive more attention to preventing these wildfire risks? 


Anukool Lakhina [00:38:00] Yeah, that's a great question. And first of all, I'm an advocate for tech in fire across the board. You know, we definitely need more thoughtful, mindful, intentional tech, regardless of where in the wildfire kind of disaster lifecycle we find ourselves in, because the wildfires are are perhaps the most concrete climate impact that we're experiencing globally right now in terms of damages, structures, acres, emissions, health, habitat loss, and tech definitely has a role to play to adapt to this changing kind of climate reality that we find ourselves in. But it's not just technology where the spending is, I would argue, somewhat unbalanced. Our overall spending today when it comes to wildfires and again, I would argue most climate disasters is on suppression and recovery. And we do spend a lot more on response and recovery than we spend on prevention and mitigation. I think tech entrepreneurs and innovators are rightly responding to where the spend is. How do we make that spend on suppression and recovery more effective? And in contrast, really, innovation in prevention and funding in prevention remains underserved, I would argue, and untapped, even though the science is very clear for every dollar that you spend on mitigation and prevention, you save anywhere between six and 30 on the response and recovery. And the science is clear that fuel breaks work. These are the fires you don't hear about because the fuel breaks stop that fire from destroying the towns. It's not just that the tech is not there. I think the overall funding and prevention it needs to exist on a sustainable basis and that's missing, that's just reflected. As a result of that, you don't see a lot of innovators jumping in, a lot of entrepreneurs jumping in on that side. But, you know, we believe at BurnBot that there's a huge opportunity in for innovation and a huge opportunity for impact and focusing on prevention. 


Pete Miller [00:39:57] Just a quick story. I have a friend, a colleague, a business acquaintance who owns a vineyard north of San Francisco, and you mentioned one of the buckets people with vineyards and other things like that. And right before the campfire that season, there was an excessive amount of rain in his area. And he called the local authorities and said there's an excessive amount of rain and therefore fuel. And they said we don't have the budget to come out and do fuel management. That could have prevented in his, now, his vineyard was fine, but around him it was not. And I reflect on I spend a lot of time in Arizona and there was a lot of rain this last winter and there's a lot of fuel. And I'm hoping somebody in that area has taken what you're saying to heart, because prevention, as you say, is worth a pound of cure. So in terms of fire prevention and fuel breaks and fuel treatment and are there standards or are there ways of looking at it that are holding back efforts to prevent catastrophic fires, especially at scale? 


Anukool Lakhina [00:41:04] I think there is very good work done on structure protections. And in fact, the insurance industry has been catalytic over their trying to educate, but also standardize on home hardening measures and building code compliance. And those are all very good. But I feel like where we are missing a similar kind of standardization focus is really on how fuel breaks and fuel treatments are measured and modeled for risk reduction outcomes from an insurance and underwriting perspective. And, you know, we've seen this time and again the devastating impact of these wind driven fuel fires. Many of them are preventable. I would say that even the Marshall Fire, which was Colorado's most destructive fire in its entire kind of history, was a wind driven grassland fire, which, if you think about it, that extremely dry fuel build, if that had been treated and removed, we wouldn't have had those vegetation fires going into structures. I think where we are missing standardization is really on the vegetation side and I think some of that has to do with the fact that we take a very structure out view. Let's make sure we harden our structures. If we ember proof our windows and we harden our roofs, we'll be more fire resilient and also think we need to be augmenting that by looking at the landscape in view as well. So not just keep it as structural, but augment that and also talk about the landscape treatments that can be done. And because increasing these fires are not happening somewhere deep in the forest where nobody live, you know, in the 21st century reality, we have global vegetation intermixed with structures. You're seeing grassfires impacting the suburbs of London. You're seeing fires happening around roadsides, around power lines. So vegetation management can actually play an important role. 


Pete Miller [00:42:53] So let's just drill a little more into you talked a little bit about insurance. Most of the folks who listen to this, you know, work in risk management and insurance. Can you just amplify other ideas around how you could see insurance helping in wildfire prevention? 


Anukool Lakhina [00:43:08] I guess at the risk of sounding like a broken record. I'd first start by saying that fuel treatments work and they can protect towns, cities, communities. And there's enough examples, enough evidence case. We don't hear about these as much because, you know, it's perhaps less sensational to show that the Oil County Fire in 2022 was stopped in Napa County because of a fuel break that was done or the logs were on fire in New Jersey, eventually stopped when it ran into a prescribed burn that was done earlier. We don't hear about this, but the science is pretty clear that fuel breaks actually, because they remove the fuel. They're not only stop these wildfires, but they also give valuable staging areas for firefighters to respond. On the insurance side, we need to figure out mechanisms where communities that do fuel treatments and do mitigation are rewarded. I feel like even though the science is clear that fuel breaks work, we need that to kind of face itself from the insurance side so that you we can incentivize and we can reward communities that are doing doing the hard work of putting in these fuel breaks and doing the landscape treatment. 


Pete Miller [00:44:18] You're certainly doing a lot of very interesting and fascinating things and things that are actually making people's lives better and safer as well. When you look ahead, what what's next? What what do you see for you? What's the future or what things are you interested in going forward? 


Anukool Lakhina [00:44:33] We've got to get this done. I guess the call to action here is, you know, can solve this if we move it purpose and velocity and with intentionality. We are approaching this from many different angles, as we've been talking about. But whether it's at the policy level or directly working with communities are creating kind of meaningful, sustainable businesses that allow us to prevent wildfire risk in communities or on private and public lands. We think just working with these communities, working with policy, catalyzing new businesses that allows us to treat these areas, we want to continue to lend our voices, our expertise, our networks, our resources to solving and solving this wildfire crisis that we find ourselves in. I think 90 percent of wildfires are human triggered. So what that tells me is that this is a problem that is human created and therefore this is humans solvable. And we should not have, you know, towns getting burned down with destructive wildfires. We should not have that happen. This is something that we can solve. And with the right kind of focus on it, I think if we act now, this is something we can really make a dent. So that's going to keep us quite busy for the years to years to come Pete, and that's really what's next. 


Pete Miller [00:45:49] Thank you for that work. Thank you for your passion. I appreciate and am grateful for what you do. I think that is a huge problem. And as somebody who's seen and lived near these fires, I think the work you're doing to prevent this is crucial. Certainly look forward to seeing how this how this plays out. So, again, thank you for what you do. I appreciate your time very much today to take and to share your insights and your knowledge and your experience with us. So thank you very much. I appreciate it. 


Anukool Lakhina [00:46:20] Thank you, Pete. A real pleasure to be on this podcast. And I'm really a big fan of that you're lending your voice to this important area of prevention and prediction. So good on you, and I'm glad I could. I'm glad I could be here. 


Pete Miller [00:46:34] Today's episode of Predict & Prevent was truly an inspiring look at the incredible commitment and innovation that's happening right now in climate risk, resilience and disaster prevention. By sharing research, expertise and innovation, experts like Anukool and Randy continue to pave the way for a more resilient future. I'd like to thank Anukool and Randy for coming on the show, and thank you for listening. I hope you learned something new and inspiring from this episode of Predict & Prevent. Predict & Prevent is a podcast brought to you by The Institutes. Subscribe on your preferred listening platform and join us for future episodes where we continue to dig into this approach and the opportunities it's creating for risk management and insurance.