What would your company do if a serious health and safety incident occurred?

• What could the effects be?
• How would your business cope?

Sadly, many organizations in the past have had to face exactly this scenario. And they went out of business as a result of the losses sustained due to their poor management of workplace health and safety. 

While you may think that your workplace looks safe. Not having sight of or understanding your HSE risk could lead to your company’s financial margin being wiped out. Purely through unsafe work practices. As such, the financial survival of any organization may be hinged on a single catastrophic incident. A series of smaller ones. Or the adverse publicity resulting from the exposure of unsafe activities.

The financial costs of a poor health and safety management system can be broken down into two categories. Direct and indirect (uninsured) costs. The direct costs are those that are accrued directly from the accident and can be quite easy to calculate or foresee. They may include the medical costs and the compensation payments made to the injured workers. Direct costs are usually insurable by businesses.

Indirect costs are the less obvious results of an accident that must also be paid for. The indirect costs created by accidents are generally not immediately seen. Every year, losses running into millions of dollars are incurred by companies in the United Arab Emirates when workplace injuries and accidents occur. Unfortunately, these figures that we know of are the direct costs only. The hidden uncalculated indirect costs will be far greater. 

Insurance doesn’t cover all !

Most companies assume that their liability insurance covers them for the full cost of incidents or accidents, as well as claims in the workplace. However, research has shown that the costs paid for by insurance are only the tip of the iceberg when it comes to determining the full cost of an incident to a company.

Reputational damage is impossible to insure but can break a company. By preventing accidents/incidents and ill-health at work, you keep a good name among your clients, potential clients and the wider community. A disastrous public relations incident will take time to recover from and sales will be adversely affected. Sometimes, this damage is irreparable.

It is therefore essential that a company creates processes and procedures that seamlessly integrate safety into all operations and activities. 

Costs that could be Incurred by Poor HSE Management may include:

• Paying the wages of the employee during their absence.
• Time away from the job that is not covered by workers’ compensation insurance.
• The salaries of other employees that were not injured. But that took time away from their duties to look after or help the injured worker.
• The cost of damages to equipment and properties that were involved in the accident.
• The additional cost created by the incident. Examples include: lost production, additional supervision,  additional utilities costs created by the changes in production.
• The overtime payments made to management for time spent on any activities related to the incident. This can include caring for the injured, investigating the accident, and supervising the activities necessary to resume the operation of the business.
• The costs associated with having to write and create new health and safety procedures and processes. Attend health and safety training courses, and reposition employees in order to resume production.
• Medical bills not covered by insurance but paid directly by the employer. E.g. treatment facilities, first aid equipment and supplies.
• The decreased productivity of the injured employee on their return to work due to restricted movement, nervousness, cautiousness, or on doctor’s instruction.
• Legal fees such as prosecution fines or associated costs brought about by any enforcement action following the accident.
• Higher insurance costs following the accident/incident.
• Higher staff attrition rates as current staff lose confidence in the company and look to work elsewhere.
• Cost of hiring and training new staff to replace workers during their absence.
• Cost of hiring temporary agency staff whilst new permanent staff are being recruited.
• The loss of a revenue stream for a contract.
• Possible barring from applying for or tendering for future similar work.
• Damage to the company’s public image or good standing amongst clients and potential clients.
• Negative impact on customer relations due to reduced quality, timing, or service.
• Loss of client loyalty due to negative publicity.

Benefits of Mitigating HSE Threats

The good news is that it is easy to take positive steps to help prevent the damage from occurring in the first place. This may be done by implementing an effective health and safety risk control system to manage your risk.

Utilizing an in-house or outsourced expert HSE resource will not only help in the mitigation of the threats inherent in your business and the management of your HSE risk, it may also boost your productivity and profits thus:

• The enhancement of health and safety will improve the morale and productivity in your business because your workers will know that you are doing everything possible to keep them safe. Subsequently, their jobs can be done effectively with less difficulty and danger.
• Stress and accidents at work are two of the biggest causes of absence from work in today’s world. Whether these absences are short and unscheduled or long term illnesses, they will have a serious impact on your businesses productivity, sales, and overall profits. 

 

If you’re considering implementing an effective HSE management system for your UAE-based company and need the services of external Safety and Health experts, look no further than Corporate OHS. We provide health and safety management services, crisis management, HSE system review and audit, general HSE consultancy, and COVID-19 response and management. 

Corporate OHS also offers the option of a flexible contract and a monthly retainer, meaning your company gets immediate access to specialized HSE services with no permanent cost. For enquiries or to find out more about our services, please visit our website or send an email to enquiries@corporateohs.com.