Although the primary and most important reason for controlling and preventing occupational safety risks is about saving lives, it’s also one of the smartest business decisions you can make.
How sure are you that your operation is 100% compliant with occupational health and safety requirements? What would it cost you if one hazard caused a major incident? These are questions that many business leaders don’t have exact answers to. And that means your business is carrying major risk—perhaps more than you’re even aware of.
Here are six reasons how focusing on health and safety in your supply chain may be one of the most important choices you can make for your business:
- Being out of compliance costs money. The simple reality of business is that meeting regulatory standards is challenging. We work with many clients who strive to have a strong safety policy that is in compliance with government regulations, but may also have opportunities for improvement within their operation. When you work proactively to minimize your occupational health & safety risks, you don’t just make the environment safer for workers, you mitigate the chance of paying expensive fines to regulatory agencies.
- Violations today bring intense scrutiny tomorrow. If your company is found to have safety violations, you don’t just pay a fine and move on. You are expected to bring all areas into compliance and you will be supervised in doing so. Inspectors will return to ensure you have implemented all the required changes. Every time this happens, you run the risk of incurring additional expensive citations and fixes. Mitigating risk can keep you out of this costly cycle altogether.
- Safety issues become production issues. Incidents are costly. Some incidents are easy to mitigate and production can continue apace—but others are not. A single unidentified safety risk could turn into a disaster that disables equipment or shuts down a facility, or the investigation afterward could require a shutdown. These delays can cost millions.
- Suppliers add risk. Increasingly we see companies use suppliers in roles where employees would have once been common. Hiring outside suppliers can reduce cost and make a project more agile. But it also carries risk. Every group of suppliers will have their own culture toward safety and a track record that you may not even know about. By properly screening suppliers, you potentially reduce future safety risks and you dramatically lower your risk exposure by identifying those suppliers who may not have a comprehensive and well implemented health & safety policy. In addition, lagging and leading indicators can help you assess a suppliers’ track record and the potential for future incidents.
- Direct vs. Indirect Costs. All incidents result in Direct vs. Indirect costs. Medical expenses and indemnity payments are Direct costs. Indirect costs however are a result of production loss, re-training employees, replacing equipment, legal fees, and increased insurance costs to list a few. It’s been proven that a well-implemented health & safety program can save $4 to $6 for every $1 invested towards mitigating safety risk – there is a true return on investment when it comes to safety.
- Your reputation matters. Ultimately, incidents are seen as a reflection on the company itself, and they can shake confidence in your brand—from major clients, as well as from the general public. Controlling safety today is an investment in the future of your brand.
It’s always hard to predict the exact cost of something going wrong. It’s even more impossible if you don’t understand the risks you’re carrying. Taking the time to focus on your safety risks could be the difference between remaining a global player, leader in your industry, or not.
Do you know how compliant your suppliers are?