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There are three fundamental reasons for organizations to manage health and safety risk:
Moral – as human beings we should feel obliged to look after each other’s safety.
Legal – there are strict legal obligations imposed on employers and employees relating to the safety of employees and others affected by the business.
Economic – businesses that address health and safety risk are invariably more successful than those that do not. Loss events such as accidents or ill-health lead to significant direct and indirect costs.
Moral Reason
It is widely accepted that moral reasons should be the prime motivator for managing risk, although whether this is actually the case is open to debate in some cases.
There is a need to maintain a moral code within our society. Without it, employers may be tempted to treat the health and safety of the workforce as being of less importance than financial profit.
Moral reasons are based on the concept of an employer owing a duty of reasonable care to his employees. A person does not expect to risk life and limb, or physical health, as a condition of employment.
Society expects every employer to demonstrate a correct attitude to health and safety to his workforce. It is unacceptable to place employees in situations where their health and safety is at risk. Statistics relating to accidents/incidents and ill-health help to reinforce the message that health and safety should be effectively managed. These statistics also demonstrate that proportionately those who work for small businesses are at significantly greater risk than those who work for large organizations. This is clearly morally wrong.
In addition to the obvious duties owed by an employer to his workers, he also has a moral obligation to protect other people whose health and safety may be affected by his undertaking, e.g. contractors or members of the public.
Legal Reason
In an ideal world, organizations would all “self-regulate” or “self-police”, so that organizations identified and enforced the most appropriate health and safety standards for their activities. This has several advantages, two of which are that each business is in the best position to regulate its own activities and it would also avoid the need to have a separate (and costly) regulator. Unfortunately, not all organizations are sufficiently motivated or enlightened.
Over the years many moral obligations have been turned into health and safety law. For example, the International Labour Organisation’s (ILO) Occupational Safety and Health Convention 1981, C155, identifies some basic general legal duties of employers towards their employees in Article 16:
1. Employers shall be required to ensure that, so far as is reasonably practicable, the workplaces, machinery, equipment and processes under their control are safe and without risk to health.
2. Employers shall be required to ensure that, so far as is reasonably practicable, the chemical, physical and biological substances and agents under their control are without risk to health when the appropriate measures of protection are taken.
3. Employers shall be required to provide, where necessary, adequate protective clothing and protective equipment to prevent, so far is reasonably practicable, risk of accidents or of adverse effects on health.
There are strong legal reasons for employers to manage risk:
Preventive – enforcement notices (improvement or prohibition) can be issued by enforcement inspectors.
Punitive – where the criminal courts impose fines and imprisonment for breaches of legal These punishments can be given to the company or to individuals within the company.
Compensatory – where employees are able to sue in the civil courts for compensation.
Economic Reason
Accidents and ill-health are costly. These costs may be calculably arising directly from the accident, such as sick pay, repairs to damaged equipment, fines, and legal fees, or more difficult to assign a monetary value to such as lost orders and business interruption. In practice, the costs that are more difficult to calculate are often substantially more than those that are easier to assess.
All employers are required to have certain types of insurance against accidents, ill-health or other problems, such as:
Employers’ liability;
Public liability;
Motor vehicle;
These insurances will cover some of the costs of accidents and ill-health, e.g. compensation claims from employees and damage to motor vehicles. However, many of the costs cannot be insured against, such as:
Product and material;
Lost production;
Legal costs in defending civil claims, prosecutions or enforcement;
Overtime and other temporary labor costs to replace the injured;
Time spent investigating the accident and other administration costs (including supervisor’s time);
Fines from criminal;
Loss of highly trained and/or experienced;
Effects on employee morale and the resulting reduction in
Bad publicity leading to loss of contracts and/or
In a study by the UK’s Health and Safety Executive, it was shown that uninsured (hidden) costs can be eight to 36 times the known insured costs. This was illustrated as an “iceberg” model – where much of the costs (the uninsured ones) lay hidden beneath the water.
Some of these costs are of indeterminate value. This underlines the difficulty an organization may have in attempting to find out the true cost of accidents to the business. The company may not have enough people with the correct level of expertise and time to perform the analysis. They may not even appreciate that some costs exist and so miss them entirely. The culture of the organization might mean that many incidents are never reported and so never find their way into statistics used as a basis for costing. Some costs may not be known accurately for a long time, e.g. where a civil case is on-going and there may be a substantial compensation award. Obtaining realistic cost estimates of the impact of more subtle items such as loss of morale (leading to lower productivity) and loss of goodwill/public image (resulting in lower sales) may be next to impossible.
There are clearly financial benefits to be gained from positive health and safety management. Employers with good health and safety management systems in place are likely to save substantial sums on the costs of accidents that would otherwise have happened.
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