Fundamentals of Risk Management

Loss control
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Damage limitation
Damage limitation in relation to fire hazards is well established. Although sprinkler 
systems are often considered to be a loss prevention measure, they are in fact the 
major control measure for ensuring that only limited damage occurs when a fire breaks 
out. Other damage limitation factors related to fire include the use of fire segregation 
within buildings, the use of fire shutters and well-rehearsed arrangements in place to 
remove, segregate or otherwise protect valuable items. After the fire at Windsor Castle 
in 1992, arrangements were quickly put in place for valuable artwork to be removed 
from areas of the castle that had not (up to that time) been affected by the fire.
Accidents at work still occur, despite the considerable attention paid to health and 
safety standards and other loss prevention activities. Provision of adequate first aid 
arrangements is an obvious damage limitation activity and suitable first aid facilities 
are provided by most organizations. For some high-risk factory occupancies, emer-
gency treatment arrangements and even medical facilities are provided on site.
In some cases, these medical facilities will include specialist treatment facilities 
related to the particular hazards on site. An example is the provision of cyanide
antidotes in factories where chromium-plating activities take place using cyanide-
plating solutions. A simpler example is the provision of emergency eye-wash bottles 
in locations where hazardous chemicals are handled.
The Deepwater Horizon oil spill in the Gulf of Mexico in 2010 provides many risk 
management lessons. One of the key issues was that the oil spill took some weeks to 
stop. Loss prevention measures were in place to prevent the oil spill starting and cost 
containment steps were taken to manage the cost of clean-up, recovery and business 
continuity. It is, perhaps, the case that the damage limitation measures were not as 
robust as may have been required. Because the oil leak lasted some weeks, there was 
opportunity for damage limitation measures to be introduced. However, it does not 
appear that these measures had been sufficiently planned in advance.