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CPCU 551 Chapter 1
Commercial Property Risk Control

Additional Business Flashcards





Describe the Elements of a Fire


1) Heat

2) Oxygen

3) Fuel



Expanded Defintion

1) Heat:

a) Electrical Heat - Natural Lightening, Artificial Electrical outlet

b) Chemical Heat - oily rags, welding torch

c) Mechanical - Frictional heat breaks, ball bearings

d) Nuclear Heat - Explosion sun, reaction


2) Oxygen:

Fire needs atmospheric oxygen or o2 liberated from an o2 cotaining compound.

a) hot fires tend tod velop own airsypply by creating a draft

b) A few substances, self-oxygenate can burn without outside oxygen supply.

c) a few special chemical combinations can produce firew wiout any free oxygen.


3) Fuel

The relative combustibility of a fuel depends on the amount of heat required to cause it to produce enough burnable vapors to mix with oxygen in the air and ignite.

a) 2 Characteristics:

   (1) Temperature at which it vaporizes (chemical composition)

   (2) Extent to which it holds heat rather thank spreads it (density)

b) Auto ignition temperature (or kindling point) is th eloest temperature wo which any substance must be heated for it to ignite without a seperate ingintion source.

c) Flash point a characteristic of any combustible liquid vapor sufficient to form an ignitable mixture with the air near the surface of the liquid(or solid).





In order for a fire to start and sustain its combustion specific

elements must be present. Identify the elements necessary to start

a fire and explain how this knowledge can be useful in controlling a

hostile fire


The elements needed to start a fire are  Heat, Oxygen, and Fuel also known as the fire triangle. 

By taking any one element away a fire can not continue. 

To control a hostile fire a Risk Manager can view how fires start from their source. For example heat can start from an electrical source so proper shielding of electrical wires is important. Friction can also cause heat to proper maintenance and lubrication can prevent this. Oxygen increases the intensity of a fire, hot fires create their own oxygen by crating a draft, so suppressing the opportunity for oxygen to draw a draft through fire walls and fire doors that close and create a seal from room to room or building to building is helpful in controlling this.  Fuel is what the fire burns so managing the amount of material or liquid that can ignite and burn helps reduce the duration of the fire and and intensity.  Various materials become fuel at different temperatures so being sensitive to the combustion point of a material is important. By reducing the fire load or amount of fuel and recognizing the port of ignition materials can be property stored and placed in specific containers if necessary.

What is the loss exposure definition of Property Loss Exposure?

Property loss exposure:

A condition that represents the possibility that a person or an organziation will sustain a loss resulting from the damage (including descrution, taking, or loss-of-use) to property in which that person or organization had a financial interest.




The risk management process is used to manage the cost of risk

(premium, risk control, retained losses, and risk management

department expenses. List the risk management steps used in the

risk management process?


The steps of the Risk Management process are

1) Identify Losses,

2) Analyze

3) Examine Techniques for controlling risk,

4) Selecting the appropriate Management technique,

5) Implementing the technique and

6) Monitoring results.

Identifying losses: can be done through loss runs or if no losses have occurred analyzing similar industries and operations. Flow charts can also be used to look for pinch points or areas where a loss could cause a sever loss to operations.  Examining Techniques basically involves a feasibility analysis of the cost of the technique versus the potential savings additionally a moral responsibility may be a factor over cost. Selecting the appropriate technique may also be a consideration where multiple options are available once a technique has been selected it must be implemented including either installation but also training on safe operations, or other protocols. Lastly, if a technique is implemented ongoing monitoring should be done to examine if there was Return on Investment, an actual effect and most importantly the process should not be seen as a stagnant process but rather an ongoing one.


Objective 2)

Describe the different types of building construction according to the definitions of Insurance Service Office and how the construction type differe in resisting fire.


1) Fram Construction (ISO code 1)

A buildings exterior walls are constructed of wood or other combustible material even if combined with other materials such as brick or stucco.

- the combustibility of wood makes frame buildings susceptible to fire damage.

2) Joisted Masonry (ISO code 2)

Exterior walls are made of masonry materials such as brick, stone conrete or adobe, these walls do not depend on wood or other combustible material for support.

- joisted masonry is preferred to frame when a fire occurs.

3) Non-combustible construction( ISO code 3)

This is a special term in fire protection and fire insurance. a buidling win the noncombustible class has exterior walls, floors, and roof constructed of and supported by metal, gypsum, or other non-combustible material that will contributed little if any fuel to a fire.

- many light non-combustible buildings are suseptible to heat damage for fires involving building contents. their structure expands and twists.

 4) Masonry non-combustible construction (ISO Code 4)

a buidlings exterior walls are made of masonry materials and flors and roof are made of metal or some other non-combustible material.

- generally more resistent to fire than any of the preceeding.

5) Fire-resistive construction (ISO Code 6)

this type provides more fire protection than all other types of construction. Building materials used in fire-resistive construction resists heat longer than matererials required for protected ordinary or non-combustible construction.

- common materials are reinforced concrete and protected structural steel for framing, reinforced concrete or masonry for bearing walls and lighter noncombustible materials in other parts such as curtain walls.  MODIFIED Fire Resistive Construction (ISO 5) may include masonry materials that are slightly deficient in thickness or structural assembiles they have a fires resistive rating of 1 hour but les than two.


Objective 3)

Describe various pre-loss fire control measures


Pre-Loss Fire Control measures are based on the following:


(1) Controling the Heat Sources

(2) Separating heat sources from fuels

(3) Limiting vertical fire spread

(4) Limiting horizonal fire spread

(5) Full separation - of a buidling in to seperate fire divisions

(6) Substituting non-combustibles for combustibles  

(7) Preventing Arson


(1) Controling the Heat Sources

- Ensure that all heat sources planned for energy are actually required.

- Minimize the amount of energy necessary

- Use only the required number of furnaces, forges kils or heating devices.

- Minimize size of heat of necessary fires

- Use an alternative heat source such as hot water other than flame.


(2) Separating heat sources from fuels

- Flammable or combustible material should be kept away from fixed-location heat sources.

- Use National Fire Protection Association developed guides.

In the prescence of a heat source dust, shavings, lubicating grease an oil are potential fuels.

- Mobile heat sources such as portable welding rigs or heaters keep changing. The Equipment has to be taken where it is needed and is not necessaryily restricted to use in areas free of fuels.


(3) Limiting vertical fire spread -

stairwells, elevator shafts, ducts, and flues, laundry and trash chutes.

- windows contribute to "fire looping" as the fire shootes out of one window and into the window of the floor above.

Warehouses and stores stick hardboard containers filled with goods supply fuel to grow a fire.

Prevention: Openings for plumbing and wiring should be filled with fire resistive material.

Fire barriers such as fire doors should be preserved as building is modified.



(4) Limiting horizontal fire spread-

A fire may spread horizontally, use sprinker systems where fire walls are not possible.



(5) Full separation - of a buidling in to seperate fire divisions

Full separation of a building into spearate "fire divisions" can be achieved through the use of Fire walls.


(6) Substituting non-combustibles for combustibles  

choose non-combustible building components

choose noncombusible liquids, gasses,

choose heavy materials rather than light ones for hospital bedding, rugs, draperies, furnishings.


(7) Preventing Arson-

prevent arson by installing locks, guards, alarms and other sytesm to protect against entry or detering such entry.


Although fire is a named peril in the basic and broad causes of loss

forms, not all fire losses are covered. Losses from a hostile fire are

covered, for example, but losses from a friendly fire are not. Briefly

explain what a friendly and unfriendly fire is.


Friendly fires are fires that are intended to occur such as from a business process for example a smelter for melting iron or glass would contain a friendly controlled fire.  Hostile fires are fires that have escaped their intended confinement.   Insurance doesn’t cover loss form friendly fire because it would be considered a product of the manufacturing product. However a fire out of control aka Hostile fire, would be covered under basic and broad forms. 


A heat source is necessary to start a fire. Nuclear heat energy is an

example of such a heat source. List two other sources of heat


Two other forms of heat sources are friction caused by objects rubbing together and Chemical heat such as a chemical reacting  or gas from a  welding torch, there is also electrical heat which is another source of heat.


Learning Objective 4

Describe the internal and external facilities that can be used to detect and extinguish fires, including measures for controlling water damage and other losses resulting from a fire.


Fire protection engineers. categorize the methods for extinguishing a fire into two principal gropus: internal and external fire protection. Various measures can be used to control water damage and other losses that can also occur as a result of fire.


Internal Fire Protection - Sprinkers CO2, Halon,  / External - Fire Departments, Hydrants,


Automatic Fire Detection / Supression (sprinkler) systems-

sense and signal (alert personnel on and off the premises.

a) Water Systems-

sprinker systems that use water, faravity tanks, or public water.

Two types of sprinkers

1) Wet-pipe systems: the piping is full of water an dwill immediately discharge water when the sprinkler head opens. In responds faster than dry-pipe systems because the pipes are filled with water but can freeze.

2) Dry-pipe systems:

in this system the piping is filled with pressurized air, which holds back a greater amount of water pressure through the use of an air clapper, This type of system can be installed in unheated buildings.

3) Dry Chemical Systems:

these sysetms contain finely divided powders stored in a cylinder that is connected by pipes to nozzles that distribute powders stored

primarily used for Class B Fammable Liquid and Class C electrical fires.

4) Wet Chemical Systems -

When the extinguishing agent used i nthese systems is discharged, a blanked to foam coveres the buring fuel, usually used on cooking survaces and surroundnig areas. The foal Extinguishes the fmames by forming a barrier between the liquid fuel an dthe oxygen that helps prevent further release of flammagel vapors.





Education Objective 5

Describe risk control measures for losses caused by the following types of theft

1) Burglary

2) Robbery

3) Employee Theft


1) Burglary

Physical protection

 - Deadbolt

 - Rear doors barred

- Bars, gates and grills

- Breakresistent glass, and plastic

- Safes or valuts


Installation of alarm systems and other devices.

- Parimeter sytesms

- Object protection - contact switches


2) Robbery

- Hold up alarms

- Central Station alarms

- closed circuit cameras

- Security Guards / Patrols

- Money handling procedures /lighting/




3) Employee Theft Losses -

targets for employee theft are money, high-value merchandise, and intellectual property assets, such as trade secrets.


1) Good Raport among employees

2) Accounting controls

3) Access controls

4) Background checks

5) separation of duties


Employee theft losses cost U.S. employers over $600 billion each

year; greater than fire losses. Identify and explain two risk control

measures which focus on severity of loss.


Loss severity from employee theft are categorized by Accounting Controls and Access Controls. Accounting controls are a way to keep track of income and check to make sure that the money that is received is posted to the company and that money paid out goes to the correct recepients.  Esstentially tracking cashflow can be managed through an audit process. This is where strict policy and procedures are required. Access controls include limiting access byey use of safes, access codes, and specialized employee rights to access hierarchies.  By separating duties without having a signle person will rights to every financial aspect of the business there is an increased opportunity for discovery before a theft becomes too sever.  Background checks can also help prevent hiring someone with an improper criminal history or signs of an inherent moral hazard. In my experience as a staffing manager it seemed that it was not uncommon to find a criminal history of financial impropriety in candidates for accounting openings, so one should be expecially weary of the backgrounds of individuals working with company funds, but also with valuable merchandise.


Educational Objective 6

Describe risk control measures for losses caused by the following:

- Explosion

- Windstorm

- Flood

- Earthquake



Many explosions have the chemistry of extremely rapid combustion that can cause nearly instantanious fire over a large quality of material.

- Principles of explosion control are similar to those of slow combustion fires however there is less time to react.

- Explosion suppressors act the instant an explosion is intiatted.

- Explosive material should be kept in a low oxygen atmostphere

benting to redirect force

- changing pressure of vessels such as steam boilers



businesses can chooose to locaate away from areas with frequent sever storms such as hurricanes and tornatodes.


Build to withstand storms,

use storm shutters

maintain room and wall systems with roo tiedowns

secure materials and equipment outside the facility

locate trees and utility poles away from building


Use spare materials such as plywood pannels, tarpaulins and plastic sheets.

Patrol the premises




locate away from flood plane

Design building to be exposed to high water levels. Design dams dikes and channels to divert water.

Elevate the property

design to so that the lowest floor is above the 100 year flood plane



deisng building to be earthquake resistent.

tie down shelves to wall to avoid falling over.


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