Working without safety is a dead end job.
(Author unknown)
This chapter examineshealth and safety, the sixth of six classes of risk exposure that businesses face, relating to internal processes within the risk taxonomy proposed in Chapter 9. All six classes of risk are considered to be controllable by businesses to a large degree. Health and safety issues are part of the rich tapestry of enterprise risk management. While the UK has a strong safety culture and one of the lowest rates of fatalities at work, no enterprise can ignore health and safety. Even small businesses in the UK have supply chains that stretch across Europe and the Far East. According to the European Agency for Safety and Health at Work, every year in the European Union there are over 5000 fatal work-related accidents and millions of people are injured or have their health seriously harmed in the workplace.
While health and safety management was once seen as a peripheral activity, it is now an integral part of the fabric of society. While history has demonstrated that the attitude of society to the moral obligation of employers has fluctuated over time, the pendulum has clearly swung towards an increasing awareness and expectation of moral behaviour. Society now puts pressure on employers to modify and constrain behaviour. The public outrage at rail, sea and air disasters clearly illustrates that if risk impinges on the general public, it is an intolerable face of society. Employers are now exposed to common and statute law that is criminally enforceable. Enterprises have to consider the consequences of failing to properly comply with health, safety and environmental legislation, approved codes of practice, accepted standards and other relevant legislation concerning, for example, fire prevention, pollution and product liability. Enterprises must recognise that losses may result from the requirement to implement preventive measures from enforcement notices, punitive damages through criminal sanctions and the compensatory consequences of the imposition of legal rulings. As with many of the subjects touched on in this book, which can be considered as disciplines in their own right, a brief perspective of health and safety is introduced here as it is part of the complex jigsaw of enterprise risk management. The structure of this chapter is illustrated in Figure 20.1.
20.1 DEFINITION OF HEALTH AND SAFETY RISK
What is health and safety risk? Health and safety risk for an organisation may be defined as the risk of injury or ill health to or the fatality of an employee (or employees). The primary aim of health and safety in the workplace therefore is the prevention of death, injury and ill health to those at work and those affected by work activities.
by Robert J. Chapman Copyright © 2011, John Wiley & Sons, Ltd.
376 Simple Tools and Techniques for Enterprise Risk Management
Definition
20.1
UK H&SE
20.4
Workplace precautions
20.7
Scope
20.2
European Agency
S&H
20.5
Human error
20.8
Benefits
20.3
H&S
20.6 RM
Improving human reliability
20.9
RM best practice
20.10 20.11Summary
Figure 20.1 Structure of Chapter 20
20.2 SCOPE OF HEALTH AND SAFETY RISK
The sources of risk considered to be embraced within the term “health and safety risk” in a business context are as follows:
• more onerous government policies, legislation and/or standards;
• reputational damage;
• criminal prosecution and/or civil law suits;
• loss of market share, customers, suppliers, shareholders, funding, partners and/or employees;
• disruption to production, research or use of advanced technologies;
• negative media, press and/or internet coverage;
• increased insurance premiums and/or erosion of profits;
• increased staff turnover and associated recruitment costs.
20.3 BENEFITS OF HEALTH AND SAFETY RISK MANAGEMENT
There is a general consensus that a health and safety risk management system is good busi- ness management and improves bottom-line profitability wherever in the world the business operates. A health and safety risk management system helps to avoid:
• health and safety incidents or an increase in the number of incidents and/or their impact;
• non-compliance convictions, criminal prosecutions or enforcement notices;
• civil claims;
• adverse media attention and damage to reputation;
• increase in insurance premiums;
• compensation payments;
• the need to investigate the cause(s) of an accident;
• the need to prepare accident reports, attending hearings or inquest courts;
• the need to arrange for the injured employee’s work to be continued by another employee;
• the need to make staff rehabilitation and return to work arrangements (recognising that returning staff may need to work at a reduced capacity, at least initially);
• loss of productivity, business, early completion bonuses or future orders;
• the need to engage solicitors and barristers to represent the organisation;
• loss of board, management and supervisor time in responding to incidents.
There are a number of additional benefits such as:
• increased productivity;
• greater production reliability and reduction in the chance of losing sales to a competitor;
• improvement in staff morale, together with staff retention and recruitment rates;
• reduced staff absenteeism;
• meeting increasingly stringent lending criteria;
• improved success rate in bidding for contracts;
• improved shareholder satisfaction from meeting increasingly higher health and safety stan- dards.
20.3.1 Business Benefits
Does a health and safety risk management system improve business performance? A business survey funded by the Health and Safety Executive (HSE) attempts to answer that question (Cowling and Bevan 2007). The report’s introduction states that its aim is “to provide robust empirical evidence concerning any linkages and impacts of health & safety strategy and ex- penditure on an array of hard and soft performance measures of intermediate and final business performance”. Data was derived from a telephone survey of 3000 UK businesses, allowing for geographical representation according to government office regions. The telephone interviews were carried out in June and July 2004, and the sample was generated by random digit dialling.
Interviews were carried out with chief executive officers, managing directors, chief finance of- ficers or human resource directors in the UK. The study was conducted using computer-assisted telephone interviewing. In its conclusions the report highlights its starting hypothesis that the key to achieving high levels of business performance is to develop complementary strategies across all areas of the business because it is the overlapping and mutually reinforcing effects of multiple synergistic practices that have, potentially, the largest impact. The general approach of the survey, the authors state, was underpinned by thea prioribelief that health and safety is a key area of strategic decision making that cannot be considered in isolation by businesses, and one which should be integrated into other areas of strategy to ensure not only consistency in terms of planning, but to achieve maximum impact on business performance outcomes.
The report claims that evidence was obtained that suggested that health and safety risk is an important feature for large numbers of businesses across an array of sectors. In particular, it states that construction, retail/hotels/catering, agriculture and utilities are sectors that have to manage perceived risks surrounding health and safety. Interpreting the study findings, it would appear that, across all sectors, there was only a weak association between health and safety practices and business performance. Regarding health and safety expenditure specifically, the study noted that there was no evidence that spending more is associated with a lower level of business performance. The study considered that this could imply that higher spending is associated with a proportional increase in performance which balances this out. The study ob- served that in three cases a higher health and safety expenditure was associated with superior
378 Simple Tools and Techniques for Enterprise Risk Management
performance. It found that it was correlated with businesses having a greater capacity to attract quality employees from the industry pool, with higher employee commitment and faster sales growth. The study concluded that there was a suggestion that a strategic commitment to good health and safety practice did businesses no harm, and a spending commitment was strongly associated with tangible improvements in employee related aspects of the business.
20.3.2 The Enterprise Context: AstraZeneca
In its promotion of health and safety, the HSE provides a number of examples where businesses that have adopted health and safety practices and the “direct” benefits that have been obtained.
It is not straightforward to isolate the application of health and safety practices as the only driver behind business improvement. An example of a company embracing health and safety management is AstraZeneca which (the HSE states) recognises that personal well-being is essential for employees to build the company’s innovation and creativity, adding competitive advantage in an increasingly competitive global environment. AstraZeneca is a global phar- maceutical manufacturing company with 58 000 employees. Through the implementation of a health and safety system, the HSE advise it has realised the following benefits:
• UK health insurance spend is lower than benchmarked, saving £200 000 a year.
• UK absence levels are 31% lower than average levels for the UK quoted by the Confederation of British Industry.
• Employees note significant improvements in concentration and productivity at work,
• The company ranks in top 10% of Dow Jones sustainability performers worldwide, in the top 20% in Europe, and was recently listed in the FTSE4Good series.
20.4 THE UK HEALTH AND SAFETY EXECUTIVE
The HSE is a non-departmental public body with Crown status, sponsored by the Department for Work and Pensions (DWP) and accountable to its ministers. It is Great Britain’s independent watchdog for work-related health, safety and illness. The HSE’s primary function is to secure the health, safety and welfare of people at work and to protect others from risks to health and safety from work activity. It is responsible for regulating health and safety in Great Britain and works in partnership with local authorities. The HSE’s strategy,The health and safety of Great Britain: Be part of the solution, defines the goals that the organisation and all stakeholders in the health and safety system strive to achieve.1The HSE’s mission is the prevention of death, injury and ill health to those at work and those affected by work activities. The HSE seeks to influence people and organisations, duty holders and stakeholders, to embrace high standards of health and safety, demonstrate health and safety leadership and promote the benefits of employers and workers working together to manage health and safety sensibly. The HSE also investigates incidents and complaints about health and safety practices, and develops new or revised health and safety legislation and codes of practice.
The HSE regulates health and safety across a range of sectors and industries, including major hazard sites such as nuclear installations, offshore gas and oil installations and onshore chemical plants through to more conventional sites, quarries, farms, factories, waste man- agement sites and hospitals. It accomplishes this through continued targeting of resources to
1http://www.hse.gov.uk/strategy
priority risks and sectors such as the agriculture and waste management industries and by applying an appropriate and proportionate mix of intervention techniques such as inspection, communication campaigns, advice and support and, where necessary, enforcement action.
The HSE works together with local authorities, who are responsible for regulating half of the workplaces in Great Britain, in particular, commerce, retail, hospitality, entertainment and other services. Both regulators are responsible for many other aspects of the protection both of workers and the public in accordance with the Health and Safety at Work etc. Act 1974. Health and safety matters dealt with by the HSE have not been devolved to the administrations in Scotland and Wales. Effective working arrangements have been developed, however, between HSE and the devolved administrations to ensure that areas of “common and close interest” are managed appropriately.
20.4.1 The UK Perspective: Health and Safety Record
In 2010 the HSE released provisional data which showed that 151 workers had suffered fatal injuries between 1 April 2009 and 31 March 2010, a significant improvement on the 178 fatal injuries recorded in the previous year. As will be seen from the figures below the drop was impressive compared with the last five years:
• 2008/09 – 178
• 2007/08 – 233
• 2006/07 – 247
• 2005/06 – 217
• 2004/05 – 223
In addition to fatal injuries are deaths arising from occupational illnesses contracted by, for example, working in the mining industry (inhaling coal dust), the nuclear sector (being exposed to airborne radioactive waste products) and employment in the construction industry (inhaling asbestos dust). In other industries isolating employment activities as the sole cause of a fatal illness is not so straightforward.
The reporting of health and safety incidents at work is a statutory requirement, set out under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1995. A reportable incident includes: a death or major injury; any accident which does not result in major injury, but the injured person still has to take three or more days off their normal work to recover; a work related disease; a member of the public being injured as a result of work-related activity and taken to hospital for treatment; or a dangerous occurrence, which does not result in a serious injury, but could have done. While “dangerous occurrences” are quite specific, it is also important to consider near misses as their effective reporting has the potential to drastically reduce the likelihood of events materialising.