Impact of accidents on profits and sales

Costs associated with accidents must be paid for out of the organisation's profit. A combination of direct costs associated with insurance payouts, equipment or infrastructure replacement, and indirect costs associated with lost productivity, personnel, reputation and other factors, combine to create an expensive outlay associated with any type of accident. The Table* below provides a quick reference guide to how much additional income must be earned in order to maintain an annual profit margin.

For example, if your employees and/or contractors caused $25,000 worth of damage in the last financial year, and the organisation's profit margin was only 1%, you would need to make $2,500,000 worth of additional sales to make up for that cost.  It's obvious from these figures that there is great benefit in spending money to eliminate accident causes.
*United States Dept of Labour, Occupational Safety & Health Administration, Safety Pays 2010; Western National Insurance, The Total Cost of Accidents and How They Effect Your Profits.
If you would like to gain a better estimate of the impact of accidents within your own organisation or department, this calculator can be used to estimate the impact of accidents on annual profits. If you are not sure where to get the information you need, try some of the following:

• the Annual Report;
• occupational health and safety records;
• department records and budgets;
• requisition records; and
• human resources department; and
• accounts department.