The increase in assets, population served, diversity of services provided, and public liability of municipalities in the last twenty years has increased both their exposures to loss and their officials' concern over the political and financial effects of a large property loss or liability judgment. While well-managed business corporations have recognized the need for special skills and techniques in the efficient analysis and treatment of such risks, the results of a comprehensive survey of small and medium-size municipalities in nine states show that this need for specialized attention to risk analysis has not been recognized by many municipal officials. Rather, the risk management specialty has yet to emerge from the role of part-time insurance purchasing. Municipal policy relating to the analysis and treatment of risk is usually unwritten, and unclear. Many municipal officials are unaware of certain exposures to loss or how to reduce the costs of insurance and other risk control devices. Since World War II, the increase of industrialization and specialization of skills has been paralleled by an increase in urbanization. Not only have urban areas become more extensive, but the services demanded by the citizenry have required annual expenditures and investment of public capital at a rate of increase well in excess of that of the national income and national product.1 Larger school systems and police and fire departments have become necessary. Expansion of sewage and water systems, park systems, and transportation and highway systems have become inevitable. As new functions are undertaken, such as libraries, zoos, airports, redevelopment, Jerry D. Todd, Ph.D., is Assistant Professor of Insurance at the University of Texas. Before going to Texas, Dr. Todd was on the faculty of the University of North Carolina. This paper was presented at the A.R.I.A. 1968 Annual Meeting. 'Jerome P, Pickard, Taxation and Land Use in Metropolitan and Urban America (Research Monograph 12, Urban Land Institute, Washington, D.C., 1966), p. 9. and public housing, personnel and payrolls grow. As additional facilities and more services are demanded, administrative machinery expands. Specialization occurs, and with it comes more sophisticated delegation of responsibility and authority. Each new service or facility offered introduces new possibilities for property and liability loss exposures. When such exposures are recognized, the problem is generally considered by most municipal officials as requiring the purchase of insurance. As the amount and character of municipal property changes in the aggregate, however, the appropriate mix of budgeted loss reserves, loss prevention activities, and insurance changes. The function of identifying and analyzing loss exposures requires specialized skills and knowledge, especially in the modern complex environment. In the business world, many firms employ full or part-time risk managers to attend to this function. The problems of risk analysis