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 1950  8,000 risk management professionals are members  4,000 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   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," 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 risk  Link 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 Opportunity  Evolving industry specific standards  Non-industry specific (difficult to implement)  Government vs. government issues  Industry in a financial downturn  Low employee morale  Staff shortages

Selling Safety in all Industries  Creates a safer environment  Increases employee moral  Increases productivity  Lowers operational costs –workers’ compensation –group health benefits –other related insurance programs

Risk Management Safety  Reduces Losses  Maintains or improves worker productivity  Protects the bottom line

Elements of a Risk Management-Based Safety Program  Define the exposures  Collect the data  Research the appropriate local, state or federal regulations  Develop the program  Empower the line staff and line managers

Elements Continued...  Inform management  Educate the employees  Measure the results  Modify the program if necessary

Source: "Techniques of Risk Management," Reducing loss potential reduces the risk of loss. When loss potential is reduced, losses become more predictable and manageable.

Source: "Techniques of Risk Management," 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 data  Speak to staff  Inform line management  Build support

Source: OSHA Trade News Release, November 12, 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, Benefits of Voluntary Self-Audits  Non-punitive  Provide 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?