The Importance of Risk Control to Small Businesses

It's a conundrum: many small- and medium-sized businesses (SMBs) fail to invest in safety, when they're the ones that can benefit the most from it--and have the most to lose in the face of a costly accident. Often, SMBs assume that they don't have the money, staffing, or time to seriously address safety issues in the workplace. But creating a climate of safety doesn't have to break the bank, nor does it require a large investment of time or a committed safety officer. On the contrary, mitigating workplace risk can actually save money--as well as prevent costly, even crippling, medical, legal, and other expenses.

Hidden Costs of Accidents Hit Businesses Hard

The price of poor safety can be seen in the billions of dollars companies spend each year as a result of employee injuries. The direct costs of any workplace injury includes some portion of the employee's pay as well as his or her medical expenses; for U.S. employers, the financial burden of these direct costs is huge. In fact, according to research done by Liberty Mutual Insurance, disabling workplace injuries cost businesses nearly $62 billion a year. The top ten causes of these injuries cost more than $50 billion, with injuries caused by slips, trips, and falls accounting for nearly $20 billion.

Those costs alone are staggering. But direct costs are just the tip of the iceberg. Employers must also consider the indirect costs related to workplace injuries; these include lost productivity, the expenses involved in hiring temporary workers, and reductions in customer satisfaction as key personnel are sidelined. These costs can take a significant toll on smaller businesses. In fact, a Liberty Mutual study found that for every dollar of direct costs, there can be two dollars or more of indirect costs, depending on the industry and business.

And employees aren't the only ones that may suffer injuries as a result of unsafe workplace situations. Every day, SMBs may inadvertently put customers, vendors, and others at risk. And these accidents and related injuries can result in significant legal fees, settlement costs, brand damage, and other expenses. Poor safety can take a serious toll on a company's bottom line, reputation, and employee engagement.

Increased Safety Concerns in a Distracted World

According to Don Tolbert, a certified safety professional and technical director of risk control services at Liberty Mutual Insurance, workplace safety has become even more of an issue for today's businesses. "Risks are becoming more significant," he says. "Both in how risks manifest themselves to employers, and in the merging of different risks." Tolbert notes that employers face an increasingly distracted workforce--thanks to the prominence of mobile technology and the additional multi-tasking it has created--an aging workforce, a shortage of experienced employees in certain industries, and other key issues. All of these trends can present increased opportunities for accidents and injuries, even in seemingly safe environments.

An employee's job doesn't have to include obvious high-risk elements--heavy machinery, for example--to entail risk. "It's often things most of us don't really think about when we're considering safety," says Tolbert. "Even minor transitions between rooms can result in serious falls, particularly when the individual is distracted." In fact, injuries from falls on the same level--not involving stairs or significant elevation changes--cost U.S. businesses more than $10 billion annually, and injuries from trips and slips that don't even involve a fall cost another $2.35 billion every year. "The costs of these kinds of injuries can be very damaging to a large business," says Tolbert. "For an SMB, though, they can be devastating, given even tighter margins and the critical value each employee brings to the operation."

Simple Tips for Preventing Accidents

Fortunately, safety solutions can often be implemented cost-efficiently--it's simply a matter of recognizing safety's potential return-on-investment, and making it a business priority. Tolbert offers the following tips for business owners:

  • Keep work environments orderly: Make sure that walking paths are marked clearly and free of debris, and that housekeeping practices address wet or cluttered areas. Stations for handling spills can turn a potential hazard into a quick cleanup. Signage indicating changes in elevation, dangerous equipment, high-traffic areas, or other hazards should be displayed prominently.
  • Provide the right equipment: "Developing safer equipment and processes for doing things have reduced risk in many work environments," says Tolbert. But no amount of safety equipment will help unless it's made available--and consistently used.
  • Staff properly: Not only should new hires should be oriented to and trained in the tasks and equipment involved in their roles, but businesses should also have sufficient staff to achieve their goals, avoiding excessive overtime, overexertion, and exhaustion. Fatigue can be a significant contributor to incidents.
  • Talk about safety: No one knows what it takes to do a job efficiently and safely as well as the workers who do it. Checking in periodically with your staff can lead to simple solutions for emerging risks. Daily huddles with your team can help reinforce safety concerns, goals, and best practices for creating a climate of safety.

Available Expertise & Resources

If you're looking to learn more about improving workplace safety, a great place to start is with your insurance agent and insurer. Some providers offer safety consultations or online access to training materials and research to help you better understand, identify, and control risk.

The National Institute for Occupational Safety and Health (NIOSH) also provides a wide array of resources, including publications, videos, software, and more. And the Occupational Safety & Health Administration (OSHA), a part of the U.S. Department of Labor, provides resources and training designed to reduce risk and protect workers.

A Solid Investment

With the direct costs of workplace injuries exceeding $60 billion, and their indirect costs exceeding another $120 billion, protecting employees helps protect our economy--and your business. But risk-controlling measures don't simply help employers avoid expenditures; through increased productivity and having better processes and equipment in place, businesses can actually provide a return on their safety investment. "It varies based on industry and business," says Tolbert, "but research is showing that, for every dollar a business invests in preventative measures, they're seeing a four dollar return on that investment--with even higher ratios for more entrepreneurial businesses."

Creating a climate of safety can save lives--and businesses. With better financial outcomes and fewer workplace injuries, investing in risk control is common sense.

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