The most widespread theory on the actual or real cost of a workplace accident often features a picture of an iceberg. An image that almost never bodes well. And true to form: ‘the iceberg theory for the cost of an accident’ exceeds even the darkest suppositions. There is a lot more to it than you might first presume. 

So how much is ‘a lot more’? The general consensus has it that the unseen costs of workplace accidents are, on average, 6 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. 

Bear in mind that for some costs there is debate about whether they are recognized as above or below the metaphorical waterline. Some variants of the iceberg theory work with the distinction between direct and indirect costs. Others differentiate between insured and uninsured costs. 

Regardless, the unseen, indirect or uninsured costs demand a closer look. Especially with that 6-to-1 ratio in mind. 

So first, let’s get that ‘1’ out of the way …

… without in any way implying this part of the cost is irrelevant of unsubstantial. Generally, it consists of those costs immediately related to the accident. They are either medical costs paid out by insurance and/or costs involving the repair or replacement of equipment, tools or property. In some cases it also implies legal fees  

Following are the main less-direct, often unseen and even more often overlooked costs of a serious workplace accident. 

Extra insurance costs

Even a rare non-disputed insurance investigation will consume time, effort and possibly resources. This burden will multiply when authorities become involved. Also, your insurance might not cover everything you expected but what you most certainly can expect is a premium increase. 

You snooze, you lose money

In no way diminishing or 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. Sometimes, this results 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, experience (yet another frequently overlooked loss) 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. “It could have been avoided if only …”. Fatal accidents or accidents with serious injury 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, a grievous or traumatic accident may hinder recruitment. 
  • Loss of time for co-workers, supervisor, 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. 
  • What if the injured worker is in sales and has built up a strong rapport with a sizeable number of customers?
  • Ad hoc, reactive corrective measures (which in the long run tend to be more expensive than preventive measures). 

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