Estimating the financial costs in advance of an injury is difficult. Fortunately, OSHA’s interactive $afety Pays website offers assistance.
Using insurance company claims data, the tool calculates the estimated direct and indirect costs of an injury. Also, if you enter your profit margin information, $afety Pays will project the additional sales required to recover the costs of the injury.
Consider a simple example: Assume that a company has annual sales of US$10 million with an eight percent pre-tax profit margin. For a single accident resulting in an amputation, $afety Pays estimates the costs of the injury as follows:
- Average Direct Cost: US$21,718
- Average Indirect Cost: US$23,890
- Estimated Total Cost: US$45,608
The additional sales revenue necessary to cover these costs will be of about US$570,100.
In other words, the next 5.7 percent of sales growth will go solely to pay for the total cost of the accident. If your pre-tax margins are less, the sales impact is even greater.
Indirect costs account for the majority of accident expenses but are not typically covered by insurance.
- One final note - the answers returned by $afety Pays may be conservative with regard to the ratio of indirect-to-direct costs which is almost 1:1.
- A poll by Liberty Mutual Group estimates the actual figure may be 5:1 while an American Society of Safety Engineers study suggests a ratio of 8:1.
Who thinks investing in safety equipment and programs impacts the bottom line?
- 61 percent of executives claim that for every dollar spent on investments in workplace safety US$3 are saved (according to a poll by the Liberty Mutual Group).
- 95 percent of the executives in the poll indicate workplace safety has a positive impact on a company’s financial performance.
- OSHA’s Office of Regulatory Affairs reports an even more dramatic result; suggesting US$4 to US$6 are saved for every US$1 invested.
Strategic Ways To Improve Machine Safety
Education — Provide your employees with an understanding of machine and process safeguarding basics by Machine safeguarding experts.
Assessment and Risk Identification — Build a foundation for a safer, more productive manufacturing operation. Know the hazards presented by your equipment and processes through standards-based assessment process. Quantify the risks and make plans how to mitigate them.
Engineering and Design — Proper safety circuit design and product selection are an important part of creating a safe and productive manufacturing floor. Good practice is to consider safety design right from machine concept design stage rather than looking for retrofitting after machine moved to shop floor.
Integration and Implementation – Installation of safety systems and training on the newly installed guards and safety devices is a critical step in the process. There is more to safety than simply installing a guard or safety light curtain. Safety systems to be installed by trained installers. Properly executed, safety pays big dividends.
Why Is A Risk Assessment Necessary?
One reason is obvious - in the European Community it is a legal requirement. Most of the directives and regulations regarding machinery safety state that a formal risk assessment should be performed. Most of the harmonised European standards refer to it and the subject itself is covered by standard — ISO 14121-1 ‘Principles for Risk Assessment’.
Additionally, in North America ANSI has developed a technical report B11.TR3-2000. While not a ‘standard’, this technical report provides guidance on how to estimate, evaluate and reduce risks associated with machine tools. People concerned with the safety of machinery know that risk assessment is an integral part of a complete safety strategy.
Risk assessment is a helpful process which provides vital information and allows the user or designer to make logical decisions about safeguarding methods.
Machine Limit Determination And Hazard Identification
A complete list of all machines should be made. Where separate machines are linked together, either mechanically or by control systems, they should be considered as a single machine. Each machine is then considered to see if it presents any sort of hazard and the list marked accordingly.
It is important to consider all stages in the life of a machine including installation, commissioning, maintenance, de-commissioning, correct use and operation. Also consider the consequences of reasonably foreseeable misuse or malfunction.
All hazards must be considered including crushing, shearing, entanglement, part ejection, fumes, radiation, toxic substances, heat, noise etc.
If a machine relies on anything other than its intrinsic nature for its safety it should be indicated as a hazard source.
A machine with exposed gears has an obvious and direct hazard. But if the gears are protected by an interlocked access panel they are a potential hazard which may become an actual hazard in the event of failure of the interlocking system.
Each machine with a hazard should be identified and marked on the list together with the types of hazard present. At this stage it is only the identity and type of hazard that is of concern. It is tempting to start estimating the degree of risk posed by the hazard but this is a separate process of risk estimation.
This is a fundamental aspect of machine safety. There are many ways of tackling this subject and the following pages provide a simple, effective approach. The method should be amended as necessary to suit individual requirements. An understanding of its importance is absolutely essential.
All machines that contain hazards present risk. It is important to be able to describe at which point the risk lies on a relative scale from minimum to maximum.
1. The risk estimation must always be documented
It is tempting to make a purely intuitive judgement. While often based on experience, it almost certainly will not take into account all the necessary considerations and cannot be easily checked or passed on to others.
You must follow a logical work pattern, write down the results and get other parties to review it. Remember, it is your evidence that you have shown due diligence in the task.
2. What is risk?
The term risk is often confused with the severity of an accident. Both the severity of potential harm and the probability of its occurrence must be considered in order to estimate the amount of risk present.
3. It must take into account all foreseeable factors
As with the Hazard Identification stage it is important to consider all stages of the machine's life including installation, commissioning, maintenance, de-commissioning, correct use and operation as well as the consequences of reasonably foreseeable misuse or malfunction.
4. It is an iterative process but work need not be repeated needlessly
For example: A machine has an interlock guard door which, during an earlier risk evaluation, has been shown to be satisfactory. Provided that there are no changes which affect it, during subsequent risk assessments, no further measures will be required as the risk has been satisfactorily reduced (or eliminated).
But if the machine has never been subjected to a formal risk assessment or its usage circumstances have changed then it cannot be automatically assumed that the interlocking system is satisfactory and the risk estimation should be repeated to verify its suitability.