Safety program and risk management is not enacted from a view point that everyday a safety hazard has got to occur for these programs to be meaningful. Rather these programs are included in the organization to save organization from incurring various unnecessary cost which can effect the health of the balance sheet and the bottom line of the organization.
It is a preventive measure rather than a reactive one. For e.g.: In (OSHA Occupational Safety and Health Act.) it is said that a near miss case resolved is equivalent to a potential safety hazard prevented. Risk Assessment is a program where every possible activities are enlisted and a Reference Number is attached, to check what is the safety level of the activity. Depending upon its level, a safety measure is taken so that the act doesn’t get worse causing an accident and thus incur unnecessary direct and indirect cost to the company.
Some of the indirect costs include:Wages paid to injured workers for absences not covered by workers’ compensationCosts associated with time lost through work stoppage due to the worker injuryOvertime costs necessitated by the injuryAdministrative time spent by supervisors, safety personnel, and clerical workers after the eventWage cost and training costs for a replacement workerCost associated with lost productivity related to work rescheduling, new employee learning curves, and accommodation of injured employees/passengersCompensation to the worker/passengerClean-up, repair, and replacement costs of damaged material, machinery, and propertyLegal cost if initiated by the passenger.Safety issues, if reported on proper time as a safety program measure, all these potential costs can be avoided.Certain direct impact on the business can be including, and not limited to, the following:Loss in the number of passengers,Increase in the average number of stops per tripSince airlines typically carry complete liability insurance of hull and passengers, most of the equity decline appears to arise from prospective losses rather than actual cash outlays, resulting from the current accidentReputation of the airlines does get affected by any such accidents or near miss cases and hence it loses its credibility. This in turn affects the number of passengers who would prefer to travel using the airlineAirline accident attract far more public attention than most other sources of fatal risk.With too many players in the airline market, one can’t possibly afford to risk the business share for saving a small amount of its capital budget, which in term can reap huge tangible and intangible benefits.These safety program doesn’t need any significant investment, rather proper training to the operators and instructions to the passengers can help avoid occurring any such kind of event.
Proactive work on the unsafe conditions by team members, formed as a part of the safety group, can save the additional cost that the organization would have to bear if the problems were to convert into uneventful accidents.