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Effective Risk Management Is A Fundamental Business Plan For Your Companies Profit Margin and Quality Control.
As an employer, you have a moral, legal, financial and fiduciary duty to ensure the safety of your employees as well as a legal duty of care, to ensure that workers have a safe workplace and are not injured while at work.
If the worst happens and an adverse event has taken place, such as a significant accident, dangerous occurrence or environmental event, it is essential that this is quickly handled and well managed. You also have a number of legal obligations in terms of reporting and notification which need to be adhered to.
The Hidden Costs of Workplace Incidents and Accidents.
An accident at work, many employers, focus their efforts on looking at the immediate cause and reacting to ensure operations continue to run smoothly. Rarely do businesses look further into root causes of accidents and the true cost impact of an accident.
It is often assumed that workplace accident costs are recoverable through insurance. This is a dangerous misconception.
Accident and incident costs can be likened to an iceberg: costs that are recoverable are visible, but those that are unrecoverable are hidden below the waterline and are many times greater. The approximate the hidden cost of accidents can be up to 50 times greater than the insured costs. To put this in perspective- an incident at work that initially looks to cost your company R10 000.00 may ultimately cost you R500 000.00
Uninsured costs can include:
- Lost time and productivity
- Sick pay
- Damage, spoiling or loss of product and raw materials
- Repairs to plant and equipment
- Extra wages, overtime working and temporary labour
- Production delays
- Investigation time
- Department of Labour investigations prosecution fines
- Union Strikes and productivity Go-Slows
- Loss of contracts and damage to reputation
- Legal costs for representation and litigation
- Compensation costs to affected parties
- Rejected insurance claims
- Increased insurance premiums.
These hidden costs come directly out of your company`s profit. Furthermore, as accident losses increase, so will a company’s insurance premiums. It is clear that directly and indirectly, accidents reduce profitability.
This principle is known as the “Iceberg Effect.”
There are definite hidden savings in accident prevention with business success directly linked to effective accident prevention.
Risk control and mitigation are one of the best business investments you can make for your company.