Loss Prevention, Risk Management and Selling Safety

1. Loss Prevention, Risk Management and Selling Safety Michael Liebowitz Risk and Insurance Management Society, Inc. OSHA Compliance Assistance Conference September 24, 2002

2. 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

3. 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

4. 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

5. Risk management is the umbrella under which loss prevention and safety programs function in a company.

6. 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 Source: "Techniques of Risk Management," 1995.

7. Workplace Continued. . . • Risk managers need to cope with all elements of risk • Link between organizational goals/strategies and the risk management function

8. 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

9. The primary function of a risk manager is to minimize any harm to his/her employer’s holdings, including and most importantly, the employees.

10. Expense is the Issue !! • Management is concerned about the bottom line • Safety programs usually fall off the radar screen

11. 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

12. 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

13. 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

14. Risk Management Safety • Reduces Losses • Maintains or improves worker productivity • Protects the bottom line

15. 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

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

17. 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.

18. 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 Source: "Techniques of Risk Management," 1995.

19. LOSS PREVENTION vs. LOSS REDUCTIONAre Losses Predictable?

20. Predicting Losses • Collect the data • Speak to staff • Inform line management • Build support

21. 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.

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

23. Questions?