The actual cost of a workplace accident.

One of the key learnings from Rombit’s webinar confirming safety and efficiency as
two sides of the same coin for the connected warehouse was that the actual cost of an
accident is often gravely underestimated. We’ve talked about this before, but still, it
bears a clear, concise, and sobering reminder.

During his session on Rombit’s webinar, Behzad Ghannad, Risk Management & Prevention expert at Baloise, clearly distinguishes between direct or visible
costs and indirect, often invisible costs. Ghannad draws an important link between these
costs and what is generally covered by company insurance. Indirect costs, far less
frequently or not at all covered by insurance make for the heaviest burden and generally
amount to 75% of the actual costs.

This aligns with the widespread iceberg theory on the actual or real cost of a workplace
accident. And when talking about forklift accidents, an essential part in almost all
warehousing configurations and OpEx, Consensus has it that the unseen costs of workplace
accidents are on average six times greater than the more ‘seen’ costs. A study by the British
HSE went as far as 10 times greater and in some cases up to 36 times!

Direct costs, often but not always completely corresponding with ‘seen’ costs and usually
compensated by insurance, predominantly consist of victim compensation. In some cases,
they include the replacement of equipment, tools and property. Even far less frequently they
cover legal fees.

• Repair & replacement
  While the replacement and repair of equipment, infrastructure and stock can be(partly) covered by insurance, it more often is not.

• Increased insurance costs
  Even a rare non-disputed insurance investigation will consume time, effort, and possibly resources. This burden will multiply when authorities become involved. Again: your insurance might not cover everything you expected while you most certainly can expect a potential premium increase.
  
  
• You snooze, you lose money
  In no way trivializing the human tragedy and suffering involved in a fatal or serious accident, there often is a cost in the loss of production and reduced output. This might even result in failure to fill orders, missed deadlines, and lost contracts.
  
  
• Worker replacement
  Either there’s the cost of paying overtime or the cost of training a replacement who will lack expertise and will take time to achieve the same level of productivity. Also: efficiency can take a hit when a well-oiled team is broken up.
  
  
• Morale and reputation
  Serious accidents can weigh heavily on co-worker morale and goodwill. Fatal accidents often get media exposure, with a less than positive effect on your company’s public image and reputation.
  
  
• And yes, alas, there’s more …
  - When you’re competing for workers, accidents and a known low safety culture may hinder recruitment.
  - Loss of time for co-workers, supervisor, and administration staff.
  - The injured worker is longer out than foreseen/with temporarily or permanently reduced efficiency once back on the job.
  -Fines by governing bodies.
  

Charis Christodoulou Raftis, a researcher in smart ports and inland navigation economics at
the University of Antwerp, and the other speaker at Rombit’s webinar discussed another
cost: investing in implementing new technologies designed and proven to prevent and
mitigate accidents. Although these investments may initially seem substantial and steep, it’s
clear now that they are far outweighed by the cost of an accident.