How Do You Measure the Efforts of Your Safety Program?

On a yearly basis, a business should evaluate the Direct and Indirect Costs of their insurance program, along with their Safety Investment. These three categories make up the total cost of insurance. Safety investments include not only costs of PPE (personal protective equipment), but also the salary of a Risk Manager, and time employees spend away from production. These costs can be substantial, and thus validate the need for an annual review.

An evaluation of your safety efforts begins with a detailed analysis of the claims that have occurred over the past five years. Specifically, this analysis should include:

  • Quantified Financial Leakage year over year
  • Claim trending patterns

Financial Leakage

We discuss Financial Leakage in greater depth in our Indirect Costs article. We also highlight our Financial Leakage Calculator. When you input your Total Incurred Amount of Claims, the calculator will provide the estimated value of your Financial Leakage. Add these figures to a spreadsheet to create a graphical representation of trending.

Claim Trending Data

Claim trending data requires a deep dive into the specific details of each claim and categorizing them by a multitude of factors. A report produced by InterWest would include:

  • Incident count by month and day
  • Incident types
  • Specific body parts
  • Industry trends


The next step is to overlay a timeline of your safety programs with the above trending analysis data. A downward trend in both frequency and costs to the company should be visible. If a trend is not found, or if it is not a descending scale, it may be time to re-evaluate your safety programs.

Final Question: As a Risk Manager, what is my value to the company?

Using the annual Financial Leakage data, a side-by-side comparison can be made to interpret the financial impact. If claims and costs are trending downward, the value can be quantified in the reduction in overhead expenses, or Financial Leakage. In our article on Direct Costs, we talk about operational factors that impact the results, for example, business growth. Remember to always convert results to a rate per $1,000.

In our blog about Indirect Costs, we highlight two formulas to calculate the potential sales and profit margin growth. The recovered funds should be converted back to sales to show the value.

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