Managing Risk, Loss And Finances In The Fire Service

Despite the fact that money, buildings, equipment, materials and personnel all are needed to protect life and property in any community, emergency service organizations constantly deal with limited resources.

One primary impact on expense through risk management is the insurance premium you pay. This insurance premium is based upon a groups' shared exposures to loss. Mining, firefighting, and automobile manufacturing are each a separate group. The rate is the price a policyholder pays for transferring a unit of his risk to an insurer. This unit varies by the type of insurance - liability, fire or worker's compensation. The total premium is then determined by applying the rate to the exposure units.


Unfortunately, it is not that simple. Loss frequency and loss severity affect the rate. For example:

  • If an employer furnishes a safer place to work, the rate may be lower than for a risk where hazardous activity exists, no loss control is provided and injuries are plentiful.

  • Similarly, a fire insurance rate is affected by such factors as fire protection, building construction and type of occupancy.

  • Severity is also measured by the number of exposure units.

Therefore, better protection, active loss control, and effective risk management can help control your resources.


Typically, municipalities are subject to fire department losses through:

  • motor vehicles
  • crime and fire (property losses),
  • personnel (worker's compensation),
  • fire scene (worker's compensation and liability)
  • professional liability

Consequently, you need to know your loss history, your loss potential and the impact these have on your resources. Then you can begin to develop an effective loss control program by weighing accident prevention versus loss control and applying cost effective loss control management. The success of loss control efforts requires the full and earnest cooperation of each employee and administrator.

Without question, when accidental damage or a personal injury occurs, you should conduct a thorough investigation. Find out if the cause of the accident could have been controlled. Experience shows that conditions that cause accidents also cause waste and inefficiency. Speeding, jackrabbit starts and hard stops are unsafe and cause excessive wear on vehicle parts. This not only increases maintenance costs and accelerates depreciation on equipment, but also can cause personal injuries.


Good loss control and risk management techniques can have a positive impact on all such losses. Managing risks provides a way of controlling losses and expenses. It can make your limited resources of men, materials, and equipment more effective. And if your resources are more effective, the community you serve is safer.