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Risk Management– Why and How An illustrative introduction to risk management for business executives
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Consider this hypothetical scenario.1 In suburban Savannah, Georgia, in a concrete apartment
house that we will call the Arapaho, a 2-story concrete garage that for 30 years had
supported the weight of a 5-story, 80-unit apartment complex, almost collapsed—almost, but
not quite. A Saturday afternoon fire at the west end of the lower, below-ground level of the garage
caused much of the steel-reinforced ceiling of that level to collapse. Fortunately, the automatic
fire-suppression system that served the entire building extinguished the fire while
there was still enough tensile strength in the steel and architectural stability in the overall
structure for it to remain standing. However, by Sunday morning, each of the apartment floors
had tilted westward 3 to 5 degrees, prompting this suburb’s civil authorities to order all the
apartment units to be evacuated by sundown Monday. Tuesday morning, Chatham County
building inspectors condemned the entire apartment and garage facility as unsafe.
While searching for the cause of the fire Tuesday afternoon, the Fire Department investigators
found the body of one of the apartment tenants, widow Wanda Middleton, in the driver’s
seat of the remains of the 1978 Mercury Cougar that her husband used to drive. They speculated
that the car had burst immediately into flames when she turned the ignition key. A spark
from an electrical fault in the starter ignited gasoline that had leaked from an aging fuel line into
the car’s engine and onto the garage floor. (Modern cars have safer, but not yet hazardfree,
ignition systems.)
Based on information from these fire investigators and later reports from its own building inspectors,
Chatham County officials ordered the apartment and its garage to be imploded. As
authority for this order they cited the county’s demolition ordinance which, at the time, stipulated
such an order permissible when the costs of repairs adequate to bring a damaged building
into compliance with city codes equals or exceeds 50 per cent of the building’s value.
Why does our discussion of risk management start with a Saturday afternoon garage fire in
suburban Savannah? The fire certainly was not newsworthy beyond 3-column inches in Sunday’s
Savannah Morning News—and nothing on local television. Yet, we will explore this incident,
which could have happened anywhere at any time, because it illustrates all the essential
elements of all the accidental losses that happen everywhere, every day. This incident and its aftermath will hold our attention
throughout Risk Management—Why and How
because its relatively small and simple scope
gives us a clear perspective on just about every
major type of unforeseen event that can
fall within the proper domain of “risk management”
as it is practiced by those who devote
their careers to preventing or paying for accidental
losses. Understand risk management
as it applies to the near collapse of this garage,
and you are well on your way to managing all other risks that arise from any possible
exposure to any accidental loss anywhere.
Take some time with Risk Management—Why and How, and you will have a good start toward:
George L. Head, Ph.D, CPCU, ARM, CSP, CLU - Personal Name
978–1–933686–16–5
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Management
English
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