Getting a clear and candid picture of the cost of underperforming in workplace safety, has always been a hard and often nebulous ‘science’. Generally models consist of worst case scenario’s, politically charged or easily manipulated speculation and statistics drowned in footnotes. In short: it’s hard to get a clear look into the cost and return on safety.

In the end it’s a lot of ultimately debatable effort, to economically justify investments in workplace safety. That’s where lately Expected Monetary Value evaluation is making a real difference. 

An Expected Monetary Value evaluation trims most of the speculation down to substantiated figures, supported by an exhaustive understanding of workplace safety.

The no-frills, oftentimes sobering insights, generated by this evaluation, are being embraced by a growing number of organizations. Generally for multiple and diverse reasons. 

Simply put: it offers a clear answer to the question “Is this investment in workplace safety worth it?”

Because it shows that answer almost always to be: “Yes, actually you cannot afford not to!”

EMV evaluation in a nutshell

EMV evaluation aims to provide companies with a monetary value of a mitigation solution – on an annual basis – by assigning a monetary value to risks before and after said mitigation. Also: often other benefits of the mitigation – likewise converted to their monetary value – are added. 

Monetary values can include:

  • Direct costs related to incidents: damages and personal damages claims.
  • Direct costs related tot incidents: worker compensation claims (US)
  • Direct costs related to incidents: executive and company liability claims.
  • Indirect costs related tot incidents: production, logistics, shutdown
  • Indirect costs related to incidents: working days lost
  • indirect costs related to incidents: increase in yearly insurance premiums covering the domains above.

Conditional to the actual nature of the risk and the (safety) method(s) of mitigation, several relevant results are derived

  • First and foremost: a cumulative value of annual recurring benefits
  • A cumulative value over the product lifecycle
  • A cumulative value over equipment lifecycle

A closer, clearer look

Let’s take collision avoidance as a use case. 

The EMV-Evaluation will factor in a multitude of specific risks. For instance: a forklift hitting a worker at slow speed, a loader hitting a worker at moderate speed, damage to assets from vehicle to material collision, … . 

It will then assign to (and calculate for) this kind of incident:

  • a severity-score, 
  • a likelihood, 
  • a probability (how many incidents per year), 
  • a yearly cost impact, 
  • an Expected Monetary Value over the period of a year, 
  • the cumulative probability (incidents over asset life), 
  • a cost impact and
  • an EMV over a period of 10 years. 

(These assignments and calculations are derived from industry proven, objective and transparent risk and consequence matrices)

In this use case, extra benefits/side-effects of the mitigation are discovered, given an annual monetary value and factored in the general evaluation. For example: 

  • improved vehicle efficiency (fuel savings)
  • improved vehicle handling (maintenance savings)
  • improved vehicle utilization (asset savings)
  • insurance benefits (people, vehicle, assets) 

All these factors are calculated for a status before and after mitigation. ‘As is and as would be’. 

The end result

A clear-cut, unambiguous insight in the costs and benefits of implementing a specific safety policy/measure/technology. Hence: an insightful look into the cost and return on safety.

This makes Expected Monetary Value Evaluation a stand-out ‘tool to …

  • … a solid economic/financial argument for a specific investment in workplace safety. 

And oftentimes just as relevant to …

  • … gather support for such an investment from peers an higher-ups.

Do you want to discuss this further? Don’t hesitate to contact us! We can look at how to help you increase the safety at your workplace.

Leave a Reply