The Immense Cost of Reactionary Behaviours

One of the realities we came across in our research and development phase was a mercenary reality, which was that we recognised cost was a major barrier to change.

One of the clearest misconceptions we run into is the idea that the cost of risk-management is higher than staying the course. Consequently, risk-management becomes an “expensive option,” despite the fact that in more than a decade we have yet to have a single prospective client company show us a valid cost assessment of their current approaches. In most cases the best that can be done is to add the cost of training, the cost of insurance premiums, and the cost of known losses; and even then none of the three numbers can reliably be gathered by most companies. To put it bluntly, no one seems capable of defining the cost of current safety programs, and yet the cost factor is cited as an excuse for not making changes.

Part of the problem, of course, is that “safety” has been a moving target for decades, always introducing the same basic luck-based ideas with new terminology, always failing to impact the bottom line positively, and never really doing more than obscuring accident rates by happenstance. All this time, all this new investment, has made even the best management shy of investing anything concrete in making changes, since they distrust the changes of the past. Any method is viewed as another faddish distraction from the basic fact safety seems to be a crap shoot, and this attitude is extant often without even analysing the vastly different methodology of risk-management, or assessing the cost-specifics it can define.

One would think that even the basic fact that risk-management can be measured for cost would appeal, but there we often find another barrier: some management groups would prefer not to know how much “safety” is costing them beyond the direct, unavoidable measures. They know to realise the actual cost of the current reactionary model would cripple them with shareholders, who would be stunned to find out that all those resources invested accomplish nothing provable in practical terms. Indeed our research demonstrates no correlation between any traditional safety activity and accident rates, which begs the question of why are companies spending money if it is completely ineffective?

A pretence we hear a lot from companies is that their employees matter, usually twinned with the grandest lie of all, which is that you cannot put a price on human lives. While admirable ideals, the realities are provably different. The simplest calculation to determine the value of a human life is to add the cost of all “safety” in an enterprise, then divide it by the number of times a person has died. That will show you exactly what a life costs, since you will have poured that much money into outcomes that led directly to death. Of course, the fallacy in that calculation is that it really should be the total cost divided by the number of times you could have killed someone, since the purity of luck is the only reason you haven’t.

Not making changes because of cost ignores two basic facts we have discovered:

· You cannot proclaim the cost of productive change to be beyond the acceptable range if you can’t honestly define the cost of doing nothing; and

· You cannot assign a cost calculation to any system that relies on luck to avoid disaster.

The immense cost of reactionary behaviours is obvious post-incident, but within months of those expensive incidents the momentum for change is always lost because any investment is directed to avoiding the same scenario, without ever actually understanding the underlying failures. By the time the inquests determine cause, they have generally obscured the practical realities by drowning them in politics. And even when they are pristine, those recommendations come far too late to make adjustments.

Risk-management solves the timeline problems, allows fine cost awareness, and divests the luck-based approach entirely when done well. Cost is no reason to resist the benefits, because unlike what is extant in the industry today, risk-management can be managed for cost, and can also prove its value on a per-cost basis, which makes it an actual management process rather than a reactionary one, where costs simply cannot ever be controlled.