This white paper analyzes how Southern California wildfires create complex risks for banks’ real estate portfolios. In the near term, the impact on lenders largely depends on the extent and reliability of insurance coverage for exposed properties, influencing credit risk and potential losses. The paper also examines how analytics can help assess short‑term insurance risks. Over the longer term, portfolio implications are driven by broader economic effects tied to the viability of insurance markets in high‑risk areas. As insurance becomes more limited or expensive, wildfire risk can affect property values, lending decisions, and regional economic stability, creating sustained challenges for banks and other lenders.

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