Ganapathy RamachandranHead, Operations Research and Systems Studies Section Fire Research Station, Borehamwood, Hertfordshire WD6 2BL, England Management of fire risk in a building involves three stages -risk evaluation, risk reduction and risk transfer. Statistical and economic techniques have been developed for analysing problems encountered during these stages. These methods and the data needed are reviewed in this paper with some examples illustrating their application.Fire risk can be expressed as the product of two factorsprobability of fire starting and probable damage in a fire. The first factor can be reduced by fire prevention measures aimed at identifying and eliminating major sources of ignition. The second factor can be reduced by fire protection devices such as structural protection, detectors and sprinklers and by fire fighting by fire brigades. Depending on their perception of and attitude to fire risk, the public may be persuaded to adopt some of the fire prevention and protection measures through education, publicity campaigns and economic incentives. Some measures may have to be enforced through regulations, legislation and standards.By adopting suitable prevention and protection measures a property owner can bear himself (self-insure) part of the risk especially that associated with small fires. The part of risk associated with large fires can be transferred or disposed of through insurance which converts an uncertain loss into a known cost, the insurance premium. The premium decreases with an increase in the level of self insurance (deductible). This interaction between fire protection and insurance is discussed in the paper within a framework provided by Decision Theory and Utility Theory.
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