In any workplace, protecting workers' lives and safety is of great importance - for multiple reasons. 

First, there is the human element - an organization wants to protect their team and ensure that they are not exposed to unnecessary risks. 

Second, the organization’s culture and reputation are directly impacted by how safe they are perceived to be by their employees and community. 

And finally, there’s financials - each injury or fatality in the workplace impacts an organization’s bottom line. 

If you want to read more about how each of these factors is affected when an electrical incident occurs, take a look at our series about the impact of an electrical incident in the workplace.

With an organization’s financials, however, there is a balance to be found. Often implementing safety measures comes at a cost to the organization - whether direct or indirect. Depending on the likelihood that those measures will prevent an injury or fatality, this cost can outweigh the benefit. For example, even though outfitting all employees with fireproof gloves will lessen the chance of burns to their hands, the cost benefit analysis will show that doing this is not a practical decision for workers who are unlikely to be exposed to that particular hazard.

Value of a Statistical Life

When looking at the cost benefit analysis of spending money to implement workplace safety processes, Health Officers often look at the value of a statistical life (VSL). The VSL differs from value of life as it focuses on the changes in likelihood of death, whereas value of life is more about the price one would pay to avoid certain death. VSL comes into play in workplace safety, as incidents are not guaranteed to occur, and so the motivation and cost taken into account is in regards to the reduction of mortality risks. 

VSL is not just for workplaces, though. It is also used in nearly every governmental regulation, especially in environmental and road safety regulations. When creating new policies, governmental agencies will use cost-benefit analysis to justify the cost of risk reductions to the benefit of impact to human life.

How Much Money is Reasonable to Spend to Save a Life?

This question was posed to us in a meeting with the Principal SHE Advisor at an Australian Mining Company, and it is one that Environmental Health and Safety leaders at organizations all around the world ask themselves. To answer this question you first must ask a few more first: how does the cost of implementation compare to the cost of the fatality? And does the spend justify the reduction of risk?

The knee jerk reaction to this question can be “any cost is worth preventing a fatality”. While this is true to a degree, it is not entirely reasonable or feasible. The cost of implementing safety features is not always justified by the amount of risk present for employees. This is why construction sites require helmets and other PPE, but office jobs do not. Before deciding how much to invest in safety, you first must know how likely the risk is, and how big of an impact it will actually mean if it should occur - both physically to the employee and financially to the organization. This approach is supported by many different legislative guidelines. For example, Queensland’s Electrical Safety Act 2002 specifically notes that organizations must ensure electrical safety, however the cost associated with the measure must be considered in the feasibility of the measure. 

Calculating the Benefit of Electrical Safety Measures

Regulations exist to standardize practices and to ensure organizations do their part in protecting their people. However, many organizations find benefit in going beyond the bare minimum requirements. Before it became part of governmental regulation, organizations still considered workplace safety, with the primary goal of protecting workers and reducing costs. By looking at the tools we use, we can mitigate the severity and frequency of these kinds of incidents - and this is where introducing electrical safety measures beyond regulatory requirements come into play. 

Identification of risks in the workplace before an incident occurs allows for an organization to eliminate or minimize the impact before an incident occurs. This mitigation of risk reduces costs for employers and creates a safer workplace for employees.

When planning upgrades to safety, only focusing on the price will likely result in low-quality equipment that meets minimum compliance standards. Should that equipment then break down, the only way to rectify the situation is to spend more money. By focusing on the life-cycle cost and net present value (NPV), organizations can compare the true cost of different safety measures and their impact. Over time, this will result in savings for the organization. 

Investing in electrical safety specifically is incredibly important because the risk to employees and their lives is very significant. Beyond employees, there can also be risks to the organization, in terms of damages, community impacts, and economic losses. For example, an arc flash injury can cost $8-10 million to an organization, and one extreme case went to $29 million. 

Research shows that the cost to an organization for implementing safety changes is outweighed by the benefit of the savings in terms of lives, injuries, and lost days of work. When making safety changes, using the Hierarchy of Hazard Control can be helpful, as it allows for different levels of risk tolerance, based on the realities of the situation and the task at hand.

Taking workplace safety from compliant to comprehensive will help save lives, improve the employee experience, and ultimately, save money for the organization.