Risk management in the fire service is getting a lot of attention these days. And we’ve all read and heard mantras like “you have to risk a lot to save a lot,” but what do they really mean? How much risk should we assume?

In my opinion, we don’t know; we’re like Nike — we just do it. At best, we unconsciously quantify risk using the recognition-primed decision-making model. The accuracy of that calculation, however, comes under serious doubt when the annual numbers of fireground injuries and deaths are considered.

I also think that before we make any real progress in risk management, we must find a better way to quantify risk. The insurance industry quantifies risk with data. Insurance actuaries use the data to calculate risk so that companies make good underwriting decisions. They break risk into two basic categories: speculative risk and pure risk.

Speculative risk has the potential for both gain and loss. If an agency insures someone against natural disaster, for example, it loses money when a disaster occurs, but makes money when it doesn’t. Pure risk has no probability for gain. In such situations, clients are simply transferring the risk to the insurance company so that the inevitable loss will be covered.

When we take a speculative risk (throw a ladder up to that person in the window), it makes sense. We stand to gain (make the rescue, not get hurt, etc.) most of the time. We don’t do well when we take on pure risk (fight a loser). The property owner is transferring his risk to the fire department. We have no probability of gain, and often get hurt or even killed in the process.

A large part of risk management is the analysis of data. The fire service needs to do more here. Part of our reporting form needs to document what the true insurance responses to fires are. How many of us can estimate dollar loss with any real accuracy? Have you ever seen a class on that for fire officers?

I shared my thoughts with the owner of an adjustment company who has been in the business for more than 25 years. He immediately knew what I was talking about because he’s seen it happen time and time again. He also commented that very often the damage estimates he’s seen from fire department reports are ludicrously inaccurate.

Here’s a bit more of the information he passed on:

• By far the most damaging aspect of a structure fire is water. If the fire is on an upper floor, chances are the floor below it will be written off as well.
• If the roof is pierced by fire, not through a vent hole, you can probably assume that the building is a total loss.
• If you have 40- to 50% of a residential structure involved in fire, water, and smoke, as a very general rule of thumb, the place will most likely end up being written off by the insurance company.
• Adjusters use the National Building Cost Manual to help them determine loss. Why don’t we build in accurate building value per square foot (not city assessment) to our pre-plans? At a fire, if we periodically estimated the square footage damaged (smoke fire, and water), calculated the value of that using the manual and kept comparing that to the assessed value, couldn’t we recognize pretty quickly when we had a loser on our hands?
• The Insurance Services Office has a claims database for property losses. What if we could find a way to link that to the National Fire Incident Resporting System database, matching incidents to claims? Wouldn’t that be a good start towards an outcome study?
• Adjusters appreciate the assistance they get from fire departments very much. They are very eager to repay the favor. Find one in your area and establish a relationship. You might be surprised at how much you have in common. There’s one in the office I visited who is a former fire chief.
• Adjusters will provide you with a verbal loss estimate they may make on an incident in your jurisdiction. In Maine, a written request under the Arson Immunity Act must be made.

I’d like to make a review of the insurance loss report part of our PIA processes with an eye to whether or not the risks we took were appropriate. Over time, we should be able to learn and assume less risk while maintaining firefighting effectiveness.

The days of putting on a show for the papers and satisfying our need to have “fun” should be replaced by education and rational decision-making based upon good data and experience. It’s time to stop paying lip service to risk management and start doing the tedious work it requires. Otherwise, we’ll continue to assume the risks created by people who refuse to install sprinklers, follow codes, or follow common-sense fire safety guidelines. Personally I think the health and safety of our people is worth the effort.