Costs of accidents

This information shows the large costs of accidents in the process industries. The next section sIk.iws the deadly effects that process accidents can have and commends us to reducing tlicir Ircquency and effect through the use of PSA. 

The efficiency of the existing systems is unlikely to be measured. Head counts of staff dedicated to PSM and ESH, and costs of PSM and ESH investments will be available. However, these provide no measure of efficiency and are probably inaccurate anyway. Other staff contribute part-time to PSM and ESH, and most projects will have benefits beyond PSM and ESH improvement. You should attempt to gather information on matters such as the time it takes to respond to new requirements and the annual costs of accidents, incidents, and noncompliances. These data will provide a baseline from which you can measure improvement as the integration project moves forward. 

Fatal accident rate Lost-time injury rate Capital cost of accidents Number of plant/community evacuations Cost of business interruption Cost of workers compensation claims Number of hazardous material spills (in excess of a threshold) Tonnage of hazardous material spilled Tonnage of air, water, liquid and solid effluent Tonnage of polluting materials released into the environment Employee exposure monitoring Number of work related sickness claims Number of regulatory citations and fines Ecological impact of operations (loss or restoration of biodiversity, species, habitats)... 

One major oil and chemical company has collected data on the cost of accidents, the equipment involved and the cause of the failure for more than 50 years. These data are analyzed annually to help decide where to focus efforts to reduce losses and/or to modify design standards to prevent recurrence. This analysis also identifies failures of the PSM and ESH management system. These can be compared with the cost of delivering the systems and adjustments made to expenditures to improve the cost/benefit balance. Any such changes must be carefully considered as normal statistical variation may cause you to take unjustified action. 

Calabresi G. The Cost of Accident. New Haven, CT Yale University Press 1970. 

II. Estimate of Total Cost of Accidents Related to Sleepiness... 

Damien Leger developed a special report for the National Commission on Sleep Disorders Research (NCSDR). He estimated that the total cost of accidents attributable to sleepiness in 1988 was between 43.15 billion and 56.02 billion dollars (5). He reported that in 1988, the costs of all motor vehicle accidents ( 70.2 billion), work-related accidents ( 47.1 billion), home-based accidents ( 17.4 billion), and public accidents ( 10.9 billion) were 143.4 billion. Any duplications between work-related and motor-vehicle accidents and home-based and motor-vehicle accidents were eliminated in the total by the author. Thus, the total amount was less than the sums. 

Falls accounted for 4100 deaths, or 22.8% (524,400) of the 2,300,000 disabling injuries, or 2.5 billion of the 10.9 billion cost of accidents in public places. Using the lower cost estimate of 41.6% of total accidents (218,150 disabling injuries) that occurred at maximum hours of sleepiness and 36.1% of fatal accidents (1480 fatalities) accounted for a cost total of 1.04 billion. The higher estimate of 54% of total public accidents was due to nocturnal sleepiness, which yielded 283,176 disabling injuries at a total cost of 1.34 billion. 

Therefore, the total estimated cost of accidents related to sleepiness was the sum total of all component costs. Thus, the lower estimate of cost related to sleepiness includes 1,907,072 disabling injuries and 24,318 fatalities, creating a cost of 43.15 billion in 1988. The higher estimate accounted for 2,474,430 disabling injuries, at a total cost of 56.02 billion (rounding would give a total of 43.2 billion and 55.9 billion, respectively). 

More than 44 million Americans live or work near places that pose risks from the storage or use of dangerous industrial chemicals.154 The cost of accidents may be more than just a monetary one to the company. A fire and explosion occurred on July 4, 1993, in a Sumitomo Chemical plant in Niihama, Japan, that made over half of all the epoxy-encapsulation resin for semiconductor chips used in the entire world. Cutting off the supply would have been a serious inconvenience to the customers. The company took the unusual step of letting other companies use its technology until it could rebuild its own plant, so that a supply crisis never developed. The company still supplied 50% of the world s requirements for that resin in 1999.155... 

The Division of Vital Statistics reports that accidents are the leading causes of death for persons in their teens and up to age 45. In industry, there is no intent to kill or injure workers yet accidents kill and maim people. Many of the injuries reported as sprains and strains often involved the back. The incidence of fatalities and injuries (along with potential monetary losses) may increase as operations become more complex. The cost of accidents in the workplaces of the United States is approximately 150 billion annually. Some examples of costly accidents are ... 

Accidents are expensive. To successfully incorporate prevention in the workplace, management must be shown that accidents are more expensive than prevention. To do this, they must be able to estimate the cost of accidents. The costs associated with workplace accidents, injuries, and incidents fall into the broad categories listed in Figure 3-1. 

Absent a more reliable system, many safety practitioners accepted as universally applicable Heinrich s undocumented premise that the incidental cost of accidents has been found by analysis to be four times as great as compensation and medical costs (Citation 40). 

Hidden Costs. To industrial executives is offered the incidental or, more correctly, the hidden or indirect, but nonetheless real, employer costs of accidents, as indisputable evidence of the need for recognizing accident prevention as an essential of sound business management. 

In the 1974 book titled Management Guide to Loss Control, Frank E. Bird, Jr. presented what he called the iceberg theory of incident costs. In an exhibit having the appearance of an iceberg and captioned The Real Costs Of Accidents Can Be Measured and Controlled, Bird gave these ratios ... 

To sum up, Heinrich s attempt at developing a method to discover the total costs of accidents was noteworthy. But, the 4-to-l ratio cannot... 

The final phase of the accident sequence and the last link in the chain reaction are costs. All contacts and exchange of energy result in some form of loss. Losses could include both direct and indirect costs of the accident. In mining and industry, property damage costs could be up to 50 times greater than the direct costs of accidents. A third is the hidden costs, which are seldom identified or tallied. The hidden costs of the accident are also losses that are hard to determine, but which exist nevertheless. 

Monnery N.,1998. The costs of accidents and work-related ill-health to a cheque clearing department of a financial services organization. Safety Science, Volume 31, Issue 1, March 1998, Pages 59-69. 

---