Tjeerd Hendel-Blackford, Enhesa
“Money, money, money, must be funny, in a rich man’s world”. So sang ABBA. I doubt ABBA have any money concerns and probably find that hilarious. Most of us don’t think money is very funny at all, especially EHS Managers and Directors who are continually expected to “do more with less”. Spending money wisely to ensure safe working is of course, crucial — but making sure you don’t lose money unnecessarily is just as important. Unexpected financial surprises can come from many different sources, but for EHS managers, the financial surprise nobody wants to face is pursuit by the authorities for an infringement.
There are a great many different types of risk that your company will face when operating anywhere, be it operational, human error, financial, strategic, external, reputational, or regulatory risk. All of these risks can be amplified in jurisdictions where there is less of an ingrained safety culture, so making sure you have the right knowledge, approach and resources in your international locations is crucial. You don’t want to be caught out and end up paying the cost.
The risk that tends to be at the forefront of every safety manager’s mind is the need to keep people safe and avoid accidents. Regardless of where you have operations in the world, such risks are often most easily addressed through applying common sense and some straightforward safety principles. This presumption is backed up by the results of a survey that Enhesa carried out in September 2013 of over 200 EHS professionals from our contact database. It found that 9/10 of those surveyed selected “operational risk” as one of their main business risks.
However, the same survey goes on to indicate that the next biggest concern for the survey respondents, not far behind on 78%, was “regulatory risk”: the risk of being in non-compliance with the local law.
There are many legal requirements regulating health and safety around the world, and of course many of them vary from country to country. Although the need to make sure you are compliant with all of those laws can seem an annoyance, the laws were of course, adopted for a reason and need to be respected.
The fall-out from failing to comply with laws can be considerable and far reaching and bring their own business risks. Fines imposed by enforcement bodies appear to be growing year on year, and the possibility of prison terms for responsible parties in many countries, are real.
Let us also not forget the knock on effects that a high profile incident (or the accumulation of small incidents) can have. The direct costs of non-compliance are one thing (e.g. revenue loss or other expenses associated directly with repairing the incident such as fines), but there are also indirect costs such as production interruptions, and diminished employee productivity that can impact your organisation’s bottom line.
There are increasing examples of factories being shut down or being forced to temporarily shut down operations by authorities because of repeated non-compliance findings. Finally, there are also the costs of lost business opportunities that could arise from non-compliance, such as the on-going reputational and market damage that could result (the 2010 Gulf of Mexico oil leak, and the impact it had on BP, particularly in the US, being one such example).
So the bad news is, non-compliance could, and probably will, cost you a lot of money. The worse news is that we are seeing growing evidence of enforcement cases around the world — both in developed economies, where fines continue to rise, but also in the developing economies — where enforcement bodies are starting to assert their authority.
The good news is that investing in ensuring legal compliance is likely to be a lot less expensive when you look at the likely knock-on effects.
