Commercial property risk management:-physical and financial consequences of accidental loss can prevent the organization from achieving its objectives or even become bankrupt-Organizations must manage their loss exposures through prevention/ reduction and by establishing a plan to finance any unavoidable losses-attempt to manage their loss exposures through risk control measures, such as preventing accidents, applying risk control techniques to reduce the size of losses that occur, and purchasing insurance or using some other method to finance those losses that cannot be prevented or reduced-risk financing pays for losses that still occur (insurance)-definition of commercial property insurance:-broad-aggregate definition-all types of commercial property insurance covering property loss and related net income loss-broad definition encompasses all types of commercial property insurance such as, commercial property, crime, and inland marine insurance-narrow-singular definition-one particular type of commercial property insurance that covers lossor damage to buildings and business personal property at specified locations-narrow definition denotes one of the specific types of commercial property, crime insurance, or inland marine insurance.-6 step rmin process1. identify loss exposures- ex property loss exposure= losses resulting from damage , such as costs to repair damaged or destroyed office buildings. Losses resulting from theft; and costs of relocating during a damaged building is being repaired2.Analyzing loss exposures: determine the likelihood and probable extent.Ex) loss reduction; installing a sprinkler system to prevent fire damage 3) Examining feasibility of risk techniques: consider costs associated with each teqhnique to determine feasibility ex) installing a sprinkler system might not be feasible bc the cost and potential work interruption; while purchasing insurance and establishing arrangements for temporary relocation for the business might be feasible4. Selecting appropriate risk management techniqes: feasibility should assist in choosing best techniques.5. Implementing the selected rmin techniquesex) could include arranging meetings with organizations with whch the organization could potentially establish a resource sharing agreement, selecting a partner organization, and establishing the plan. Could also include meeting with aninsurance agent to procure the best policy to meet the organization’s needs6. Monitoring the results and revising the rmin program: examples) staging trial runs with the resource organization to make sure systems could handle the increased work-load that such an arrangement could entail, reviewing organizational policies that could influence the success of such arrangement, andannually reviewing insurance coverages and limits to ensure that the organizations needs continue to be met-RMIN techniquesRisk Control Techniques:-Avoidance: eliminates any possibility of loss-(proactive avoidance=not assuming a loss exposure in the firstplace) (abandonment=eliminating a loss exposure that already exists)-Loss prevention involves reducing the frequency of a particular loss-Loss reduction involves reducing the severity of a particular loss-Separation involves dispersing a particular activity or asset over several locations. Involves the routine, daily reliance on each of the separated assets or activities, all of which regularly form a portion of the organization’s working resources.-Duplication: involves relying on backups, that is spares or duplicates, used only if primary assets or activities suffer loss-Diversification: involves providing a range of products and services used by a variety of customersRisk Financing Techniques:-Retention: involves generating funds from within the organization to pay for losses.-Transfer: involves generating funds from outside the organization to pay for losses includes insurance and noninsurance transferRisk Control and Commercial Property Loss Exposures: most losses result from a chain of events. Specific risk control measures provide valuable property protection and are applicable to property losses caused by these events:-fire-burglary, robbery, and employee theft-explosion-windstorm-flood -earthquake2 different risk control approaches to these: engineering approach- attacks hazards by reviewing and improving the design and location of properties and equipment, to reduce the number of hazards. Human behavior approach: attacks hazards by modifying people’s behaviors to reduce the frequency of unsafe actsFire: requires 3 elements; an initial source of heat, oxygen, and fuel. A fourth element and, an uninterrupted chain reaction, causes the fire to flame up and spreadConstruction type influences fire control. (fire resistance of contruction) “wood frame” more combustible than “joisted masonary” –brick stone concrete – Joisted masonary more combustible than “noncombustible” construction (metal,