What those cost managers might not realize is that there's a direct link between safety and total cost of risk, and safety insurance and risk management can provide a sustainable competitive advantage for manufacturing companies, Beyer says. Within just a few minutes, asking just a few questions, he adds, "I can convince a CFO that we should spend time talking with his safety team."
Beyer is one of seven industry heads for Zurich, which provides commercial business insurance and risk management solutions. As the keynote speaker at Rockwell Automation's Safety Automation Forum last month in Philadelphia, Beyer noted that his vertical industry — manufacturing — is the most dynamic and the most complex.
It's also inherently hazardous. Though manufacturing has made considerable progress toward safer operations — on a global basis, the frequency rate of injuries has been steadily declining for years — the inherent dangers remain very real. In 2011, there were 324 fatalities in the U.S. alone.
"We have to make this a safe industry," Beyer said. "There are many challenges. Many are human-based. The opportunity for automation to make an impact is enormous."
Beyer's job is to find which customers fit Zurich's profile for risk and how the insurance company should price them for risk. "What I look for are companies that are committed to building a sustainable competitive advantage," he said, explaining that more companies need to see safety as a competitive advantage. "There are many risk managers, but not enough risk leaders. There are very few telling organizations how to embrace risk; how to leverage risk to build competitive advantage."
To evaluate whether safety is a competitive advantage for your company, Beyer pointed to a few key indicators:
• How does your company measure safety performance? "Some people think they're safe because they haven't had accidents," Beyer said. "Nothing could be further from the truth. Are you practicing risk management or luck management?"
• Are you integrating safety into productivity, quality, risk and sustainability initiatives?
• How do you know if safety is ingrained in the hearts and minds of your employees, and is it embedded in your culture?
In an analysis of more than 2,500 supply chain disruptions from the past 12 years, industrial accidents were the leading source of disruptions. "The opportunity to leverage safety and industrial automation to make an impact on our industry is significant," Beyer said.
Zurich also reviewed 17,000 workers' compensation claims over a five-year period, and found that the top 5 causes accounted for 85% of the frequency and 89% of the severity. Top among those claims were sprains and strains. Beyer suggested evaluating material handling in production, looking at human factors engineering along with factory automation.
Making No. 5 on the list is foreign objects in eyes, an easily preventable injury that Beyer served up as a clear indication that more needs to be done. "We have a long way to go. It's the easiest to prevent; it's the easiest to control," he said. "It shows me that we have not driven that culture for safety deep enough into companies."
Safety should be a cultural imperative, Beyer said, but there's typically a safety performance gap between what is expected and what is accepted by the company's leadership, supervisors and employees. "It percolates up and it permeates down," he said. "If we don't have a method for detecting and changing those at-risk behaviors, we're prone or vulnerable to safety issues."
A business case for change involves aligning a safety focus with productivity and profitability results. Manufacturers should shift to leading (as opposed to lagging) indicators to focus on prevention-based activities. Consider the total cost of accidents and total cost of risk.