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Proving the Value of Safety
Each year, six million workers suffer from non-fatal workplace injuries, resulting in an annual cost of more than $125 billion to United States businesses. Outside the primary objective of reducing injuries to people or property, proving the value of a safety system is an ongoing challenge for safety professionals and risk managers. Many find it difficult to financially justify discretionary investments in safety-related assets and training intended to reduce work-related injuries and insurance premiums.
Compare this to something from everyday life: investing in automobile insurance. Predicting future automobile accidents is difficult, and insuring against them may seem a frivolous expenditure for people who consider themselves safe drivers. However, it is necessary to think of the other people on the road who impact their risk of an automobile accident; insurance protects drivers not only from themselves, but also from others.
Like driving, personnel in a manufacturing facility have to monitor their own safety. They must also be aware of how they are affected by the at-risk behaviors of co-workers. With noise, numerous machines and a handful of people on the plant floor, one mistake can result in a serious incident that can cause personal injury and wreak havoc on production. Much like automobile insurance, investing in safety is based on a "what if." What if something happens and there are inadequate safety measures in place? What if something happens and they are in place? What if nothing happens?
With drivers, most accidents still result in body shop repair and medical visits. However, the cost of these repairs and consultations is greatly reduced with an up-front investment in insurance. Safety investments work in a very similar way. With an up-front investment in safety programs and safeguarding systems, the financial and employee impact of incidents that occur in the facility can be significantly diminished.
Although it is difficult to prove that incidents will happen in the future, management and financial representatives of the company need to be aware of the consequences of an ineffective safety solution. By understanding the elements of risk management and the methodology of a safety investment analysis, safety engineers or risk management professionals can present the financial justification to help make operations safer and reduce both workplace injuries and insurance costs.
Integrating a safety solution to manage risk is a process that is best employed via up-front teamwork between operations and risk management, such as risk managers, safety professionals and claim analysts. In addition, it is important to understand risk and the different types of risk that exist on a plant floor. Risk awareness often leads to better decisions that can reduce soft costs. By providing an easy-to-be-safe environment for operators with safety solutions that are designed into the machine and focus on complete machine life-cycle requirements, companies are able to reduce indirect costs. In this white paper, we will highlight key elements of effective risk management and safety programs, review workers' compensation premium plans and the risks that affect them, discuss the implications on workers compensation insurance premiums, and provide ideas to easure potential savings that can be found in proactive safety investments.
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