Loss Prevention, Risk Management and Selling Safety Michael Liebowitz Risk and Insurance Management...

Loss Prevention, Risk Management and Selling Safety

Michael Liebowitz

Risk and Insurance Management Society, Inc.

OSHA Compliance Assistance Conference

September 24, 2002

Who is RIMS?

Largest association for risk managers worldwide

Founded in 19508,000 risk management professionals are

members4,000 member companies – industrial, service,

non-profit, charitable, government entities

RIMS Continued. . .

RIMS member companies:– 84% of Fortune 500– 71% of Fortune 1000

RIMS Annual Conference & Exhibition – Chicago, 2003

www.rims.org Risk Management magazine

RIMS and OSHA

Alliance signed April 2002 Improve perception of

OSHA among RIMS member companies

Exchange technical information and best practices

Demonstrate cost benefits and business value of safety and health management systems

Risk management is the umbrella under which loss

prevention and safety programs function

in a company.

Source: "Techniques of Risk Management," 1995.

How is Risk Management Used in the Workplace?

Companies face different categories of risk:– Asset risk– Market risk– Financial risk– Environmental risk

• Statutes• Regulations• Legal liability

Workplace Continued. . .Risk managers need to cope with all elements of riskLink between organizational

goals/strategies and the risk management function

Why is Risk Management Important?

Risk managers protect and preserve physical, financial, and human resources

Risk managers are not just buyers of insurance

Worker safety is a risk manager’s foremost concern

Loss prevention is the driving force of industry

The primary function of a risk manager is to minimize any harm to his/her employer’s

holdings, including and most importantly, the employees.

Expense is the Issue !!

Management is concerned about the bottom line

Safety programs usually fall off the radar screen

OSHA and Regulatory Liability

OSHA General Duty Clause provides for remedial action against employers that unreasonably risk the safety of their employees

Business community questions necessity of regulations in areas like ergonomic injuries because of the existence of the General Duty Clause

Selling Safety in Healthcare: A Challenge But Also

An OpportunityEvolving industry specific standardsNon-industry specific (difficult to implement)Government vs. government issuesIndustry in a financial downturnLow employee morale Staff shortages

Selling Safety in all Industries

Creates a safer environmentIncreases employee moralIncreases productivityLowers operational costs

– workers’ compensation– group health benefits– other related insurance programs

Risk Management Safety

Reduces LossesMaintains or improves worker

productivityProtects the bottom line

Elements of a Risk Management-Based

Safety Program

Define the exposuresCollect the dataResearch the appropriate local, state or federal

regulationsDevelop the programEmpower the line staff and line managers

Elements Continued. . .

Inform managementEducate the employeesMeasure the resultsModify the program if necessary

Source: "Techniques of Risk Management," 1995.

Reducing loss potential reduces the risk of loss. When loss potential is reduced, losses become more predictable and manageable.

Source: "Techniques of Risk Management," 1995.

Loss Prevention

Benefits– Reduced costs

• Direct loss• Indirect loss

– More efficient use of resources

– Morale and loyalty of employees

Costs– Capital expenditures– Program expense– Administrative

expense– Maintenance cost– Disruption of

operations– Resource allocation

LOSS PREVENTION vs. LOSS REDUCTION

Are Losses Predictable?

Predicting Losses

Collect the dataSpeak to staffInform line managementBuild support

Source: OSHA Trade News Release, November 12, 1999.

Employer Self-Audits

85 percent of employers conduct voluntary self-audits of safety and health

90 percent of employers conducted an inspection of their workplace in the last year

Why do they do it?– To reduce illness and injury rates– To comply with OSHA regulations– To do the right thing

Source: OSHA Trade News Release, November 12, 1999.

Benefits of Voluntary Self-Audits

Non-punitiveProvide employers with opportunity to fix conditions

that violate OSHA regulations before an OSHA inspection

Reduce costs associated with injuries:– Workers’ compensation

– Medical payments

– Sick leave

– Lost productivity

Questions?