Safety reporting rates remain stubbornly low, especially in high-risk sectors, like construction, mining, shipping, etc. Taken alone, these low reporting rates would be reason enough for concern. Remember, chronic underreporting and the devaluing of near-miss analysis don’t conduce to creating a thriving safety culture. But underreporting safety incidents have major cost implications, too. Here’s the cost of underreporting safety incidents.
Near misses, for one, often become larger incidents when left underreported and unvalidated. That’s because near misses and small safety incidents point to stresses on and in the larger safety system. The best way, then, to establish the true cost of near-miss and small incident underreporting is to look at the cost of (eventual) safety incidents.
Those costs are enormous. The federal regulator, Safe Work Australia reported that the median payout for a serious worker’s compensation claim stood at AUD$11,500, a 39 percent year-over-year increase. Meanwhile, indirect costs also soared; the median time lost for a serious claim jumped 32 percent in the same time period.
Predictably, median costs are higher in high-risk, high-impact sectors. Again, in Australia, the average cost of a construction incident and injury shouldered by employers, workers, and the community ranged from AUD$3,372 for short absence injuries all the way up to AUD$1,689,193 for full permanent incapacity, according to researches.
An economy-wide snapshot paints an even more devastating picture. According to estimates from the U.S. safety statistics reference source, Injury Facts, workplace injuries and deaths cost the U.S. economy a staggering USD$150 billion. Employers and workers lost nearly a third of that total in wages and productivity, with employers alone incurring over USD$12 billion in uninsured costs. The other direct costs of underreporting safety incidents include increased insurance premium payments and damage to plants and machineries.
It’s not just sunken direct costs, too. It’s missed opportunities, as well. Besides lost productivity, indirect costs also consist of entrenching unhelpful safety attitudes and behaviours, the rooting of which only serves to further elevate safety risk.
Further, reporting small incidents and near misses generate quality-of-business benefits on their own. The clearest benefit is the opportunity to absorb the vital learnings reporting incidents provide. The reported data and analysis help teams get to the bottom of incident causes, learning and improving for next time. A Safety team empowered to efficiently report their near misses and small incidents also sees gains in engagement, productivity, quality, and efficiency.
What’s more, recouping these reporting benefits is easier than you’d think. To learn more, download our comprehensive guide to addressing the underreporting of safety incidents.
P.X.W. Zou et al., The University of New South Wales: Return on Investment of Safety Risk Management System in Construction.
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