1. Cost of Occupational Accidents: An Activity Based Analysis Pall Rikhardsson MSc PhD The Aarhus School of Business Department of Accounting par@asb.dk Presented at the Safe Community Conference 2001 Viborg County Denmark

2. The Aarhus School of Business Pall Rikhardsson - Department of Accounting The SACA project The Aarhus School of Business and PricewaterhouseCoopers 9 case companies 27 occupational accidents 31 interviews

3. The Aarhus School of Business Pall Rikhardsson - Department of Accounting The SACA project Aims Test a method for assessing company occupational accident costs Indicate size of these costs Assess the effects of stakeholder interest in occupational accidents on company costs

4. The Aarhus School of Business Pall Rikhardsson - Department of Accounting The SACA metod Accident Activity- analysis Cost analysis Results

5. The Aarhus School of Business Pall Rikhardsson - Department of Accounting Production loss due to replacement personnel Company time - meeting with H&S authorities 05 1015 20 2530 100 % salary to victim, first 14 days Lost hours on day of accident - victim Internal investigation and safety forms Administration - safety manager Information to upper/top management CEO/manager time Time used by helping colleagues Administration, department manager Extra costs of salary administration Supplementary salary to victim Administration -legal department Colleagues discuss the accident Company time - meeting with police Information to staff functions Training of replacement personnel Change in technology/new instructions Extension of safety meetings Colleagues visit victim Information meeting and communication Cost of employing a new employee Investment in new machines/technology Presents and flowers to victim Extra safety meeting Preventive education/training Colleagues overtime External manpower Costs when victim returns to work Fines Compensation Activities 6 activity groups 1. Absence 2. Information 3. Administration 4. Preventive 5. Production loss 6. Other

6. The Aarhus School of Business Pall Rikhardsson - Department of Accounting Costs Time Materials External services Other

7. The Aarhus School of Business Pall Rikhardsson - Department of Accounting 65% 4% 13% 3% 14% 1% Absence Information Administration Preventive actions Loss of production Other Distribution of accident costs

8. The Aarhus School of Business Pall Rikhardsson - Department of Accounting Total accident cost pr. company Company Accidents in the year 2000 Range of total accident costs (DKK) Contruction 1 1493.006.52 - 8.976.5055.681.171 625.038 - 161.706 71.530 1229.820 - 1.542.708 585.236 43414.950 - 5.919.251 3.846.794 534.695 - 107.910 75.300 326.964 - 277.344 110.424 40222.280 - 3.746.920 1.507.853 785.442 - 1.373.841 520.828 514.660 - 287.250 123.998 Average total accident cost (DKK) Contruction 2 Contruction 3 Service 1 Service 2 Service 3 Production 1 Production 2 Production 3

9. The Aarhus School of Business Pall Rikhardsson - Department of Accounting Total accident cost pr. employee - 2.000 4.000 6.000 8.000 10.000 12.000 14.000 C1C1C2C2C3C3S1S1S2S2S3S3P1P1P2P2P3P3 Company Accident cost pr. employee DKK Lowest/employee Average/employee Highest/employee

10. The Aarhus School of Business Pall Rikhardsson - Department of Accounting Conclusions (1) The SACA method can be used for accident cost analysis in most companies. Cost behavior varies due to e.g.: Accident type and duration of absence Wage structures and policies OHS management system scope Production process vulnerability

11. The Aarhus School of Business Pall Rikhardsson - Department of Accounting Conclusions (2) Costs of occupational accidents differ regarding management visibility The average ratio of visible/invisible costs is 1:1,5 These costs are usually not insured

12. The Aarhus School of Business Pall Rikhardsson - Department of Accounting Conclusions (3) Few companies use the accounting information system for accident cost management in spite of being technically possible The reason given is limited managerial and practical feasibility A feasible way might be to periodically calculate costs of selected accidents and then estimate total costs

13. The Aarhus School of Business Pall Rikhardsson - Department of Accounting Conclusions (4) Reported level of general stakeholder‘s interest in company occupational accidents is negligible Only customers and labour unions have expressed explicit interest in accidents Effects on costs are non-existing Accident prevention is seen as potentially more important in the future

14. The Aarhus School of Business Pall Rikhardsson - Department of Accounting Pall M. Rikhardsson MSc PhD Associate professor The Aarhus School of Business Department of Accounting Fuglesangs Allé 4 8210 Aarhus V Denmark Tel.: + 45 89 48 66 88 Dir.: + 45 89 48 63 76 Fax: + 45 86 15 12 90 Mobile: +45 28 59 98 32 e-mail: par@asb.dk http://www.hha.dk/EOK/REGN/STAFF/PAR_FORM.HTM