Safety Pays: How Risk Control Benefits Probabilities and ROI

Safety Pays: How Risk Control Benefits Probabilities and ROI

Should safety and risk management have a clear ROI? That’s the million-dollar question. Before answering that, let’s discuss the importance of safety and risk control and how that ultimately impacts your business.

In today’s risk management environment, safety and risk control programs are a necessity. The insurance market is hardening, which means that insurance carriers are becoming less willing to take on risky customers. This reduced appetite for risk will likely lead to increased rates. Furthermore, fewer carriers are willing to write a particular type of business or market, decreasing competition and potentially leading to higher prices.

Managing risks in your business is essential. Without a proper risk control plan in place, you’re gambling with your company’s financial future. Effective risk control and safety plans should be your top priority. Effective risk control includes identifying, assessing, and mitigating potential hazards. These hazards can lead to financial losses or insurance claims. In other words, risk control and workplace safety help you avoid situations where you’ll have to reach for your checkbook.

Five Benefits to Implementing a Risk Management Program:

  • Reduced insurance premiums – By reducing the number of accidents and injuries, you can lower your premiums over time. Your workers’ compensation experience mod (e-mod) can haunt you for a long time. It’s calculated based on a three-year rolling average of your past workers’ compensation claims! This takes time to fix.

  • Controlling uninsured costs – Some costs often aren’t covered even though they result from a claim. For example, often overtime, retraining, and lost sales aren’t covered by insurance. Estimations vary wildly, but it is estimated that uninsured costs are 2-10 times what companies spend on insurance.

  • Increased productivity – By reducing the number of accidents and injuries in the workplace, you can increase productivity by reducing lost workdays.

  • Improved employee morale – These programs can improve employee morale by recognizing and rewarding employees for their commitment to safety will increase employee satisfaction and retention.

  • Compliance with regulations – Programs that include OSHA standards can help organizations to comply with safety regulations, which can help to avoid costly fines and penalties.

Safety ROI

Now for the question of ROI. People often discuss safety and how it should have a clear ROI. Truly, ROI is nearly impossible to calculate (with any accuracy) except in hindsight. So, only after implementing changes can you make any actual calculations. But what you can do is look at probabilities.

Implementing a proper risk control program will reduce the likelihood of incidents, resulting in lower claims in severity (amount) or frequency (total number). With lower claims, you will likely receive lower premiums. The insurance industry spends billions of dollars on risk control every year based on the probability that they will pay fewer claims. If you adopt a similar approach to risk control, you will see positive results.

The primary objective of risk control is to reduce incidents. You will lower your insurance premiums over time by implementing safety measures and reducing incidents. I have worked with companies where reductions of up to 80% in premiums occurred when appropriate safety and risk control programs were implemented. This strategy isn’t a hack or a shortcut. It is the long game. This strategy requires patience, as it may take 18 to 24 months to see results. If you have been paying high premiums due to years of claims and are now implementing changes, the savings will be huge.

Undoubtedly, risk management can have a substantial impact on your business. A NSC (National Safety Council) study found that for every $1 invested in injury prevention and safety programs, businesses can expect a return of $2 to $6. Similarly, OSHA reports that companies with effective safety programs can reduce injury costs by 20% to 40%. Moreover, OSHA found that for every $1 invested in a safety and health program, businesses can expect a return of $4 to $6 in cost savings. These statements reinforce my point – the importance of risk management in business and how difficult it is to predict ROI.

Wrapping Up

In conclusion, risk management and workplace safety practices are crucial for the success of any business. While calculating the return on investment of safety programs can be complex and challenging due to various factors such as the type of safety program, organization size, loss history, and industry, it is essential to consider reducing the probability (likelihood) of accidents and incidents. By doing so, your business can boost employee morale and productivity, lower insurance costs, avoid fines, maintain business continuity, and ultimately improve your bottom line. Need a safety program in place? We get it–making a safety program can feel like a big task. But we have the tools to make it a lot easier! Our platform is designed to automate the creation of safety and risk control programs. Our tools include a free initial assessment to evaluate your current safety measures and a policy builder tool so that you can develop programs in minutes, not months. Sign up ( Want to know more about safety programs? Read our blog “Safety Made Simple: A Small Business’ 2024 Beginner’s Guide to Safety Program Elements - Developing a Safety Program” at or “Safety Orientation for New Employees: Key Points for Painless Integration” at