Why OE and Whats It All About

Modem industrial businesses exist for many reasons but one of the primary reasons is centered around this formula many will remember from college course Accounting 101  

Most successful businesses approach operational challenges directly and commit to operating safely and responsibly and a key aspect of this includes avoiding loss incidents. Eailure to do this properly may result in harm to people and financial losses that directly affect the bottom line. Because the idea of working safely is something that personally impacts each individual worker (no one is interested in sacrificing his own 

Conversely, the absence of such a plan can detract from enterprise value. Consider for a moment, the impact on a company s market value from indusUial incidents. A 2009 research study titled How Does the Stock Market Respond to Chemical Disasters by Gunther Capelle-Blancardy and Marie-Aude Lagunaz, examined 64 explosions in chemical plants and refineries worldwide between 1990 and 2005 and found that, on average, petrochemical firms experience a drop in market value of 

3% over the two days immediately following a disaster. The study calculated that each casualty corresponded to a loss of 164 million. A toxic release corresponded to a loss of 1 billion. 

For companies already struggling to meet the demands to provide sustainability and other operational data, the financial market s increasing interest in operating information may seem like just another burdensome effort and expense. In reality, it is an enormous opportunity. Financial numbers are strong short-term performance indicators, but they do not always tell the full story. To the trained eye, nonfinancial operational metrics can help complete the narrative, especially when it comes to projecting mid-to long-term performance. 

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