Understanding Loss Control: What You Need to Know Before Hiring a Safety Consultant PART 1

Over the years, because I have been a senior executive in the loss control realm, I’ve frequently been asked, "What is loss control? Do I need it? How can I implement it?" In this article, we’ll explore loss control, its significance, and how it can benefit your organization. Additionally, I'll share insights on choosing the right consultant, along with some engaging stories that highlight the importance of this decision.

What is Loss Control?

Simply put, loss control is a risk management process aimed at achieving two primary goals:

1. Preventing Losses: This involves identifying and mitigating potential hazards before they result in accidents or damage.
2. Reducing the Impact of Losses: When losses do occur, loss control measures help minimize their severity and cost.

Sources of Losses

Regardless of whether you're a business, nonprofit, or employer, the potential for loss is always present. Losses can arise from various factors, such as:

• Employee injuries
• Guest/vendor accidents
• Property damage (buildings, vehicles, etc.)
• Reputational harm

Traditionally, loss control emphasizes issues like workers' compensation and general liability, which can affect anyone. Take this a step further and include natural and man-made risks, and there are a number of elements that can disrupt a business.

Why It Matters

Consider this analogy: Having car insurance can be similar to operating a business. If you have a history of accidents, or a DUI/DWI, your rates rise. Conversely, taking a defensive driving class and maintaining a clean record might lower your premiums or keep them stable.

Likewise for businesses, minimizing claims not only reduces insurance costs but also protects your reputation. An organization known for safety is more likely to attract quality employees and customers and improve its perceived value overall. For example, if a hotel experiences incidents like mold problems or injuries, the adverse effects could deter both current staff and potential guests. And WHO wants to work for an unsafe employer? As the number of claims AND the cost of those claim increase, so does this reflect on the premiums that you will pay.

Components of a Loss Control Process

Loss control and safety are interconnected. In some scenarios, you may also factor in physical security, crime prevention through environmental design (CPTED), and loss prevention, if criminal acts are involved.

Typically, after an initial meeting with the client, loss control consultants begin with a thorough risk assessment of your corporate offices or locations. Acting like a detective on an investigation and following established protocols, they identify potential risks and challenges that can get their client into hot water and expose their organization to unnecessary exposures. These opportunities may involve workplace safety, insurance, OSHA standards, and security.

After the assessment, consultants provide a comprehensive report outlining their findings and recommendations to mitigate identified risks.

Responsibilities of the Client

Upon receiving the risk assessment report, it’s crucial to hold a follow-up meeting with the consultant to discuss findings and recommendations. Unfortunately, many reports end up gathering dust, resulting in a lack of action.

This is where "discoverability" comes into play. If a report highlights risks, especially in a legal context, failure to act can lead to severe consequences. For example:

• If you neglect to clear snow or ice from a sidewalk that you own and someone slips as a result, the identified risk in the report could significantly impact legal outcomes against you.
• If your parking lot has a history of vandalism and other crimes, and a consultant advises adding security measures that aren’t implemented, you could face difficulties when defending yourself in court.

Discoverability means that this report must be made available in a legal case. Depending on the circumstances, this report could be used in both criminal and civil cases. And your lack of action, once a report is received can improve the chances of the plaintiffs suit against you.

Crafting an Action Plan

To effectively respond to a risk assessment report, share the findings with relevant company leaders and devise an action plan. Assign responsibilities with specific timelines and strategic milestones to ensure accountability.

Then, if not already existing in your company, create a campaign around safety and security to make it a priority of all employees. While there will always be new risks, you will be surprised how quickly a culture like this can minimize the opportunities for accidents and injuries.

I recall a conversation with one of my hired consultants. He mentioned a case where a client's risk profile was in bad shape. Both insureres and investors were concerned. The CEO delegated "SAFETY" to his COO and required him to make it his and the company's priority. Working with his broker's loss control, changes started to occur quickly. Within a year, the company had a strong safety culture and was poised to see a reduction in premiums.

Your loss control consultant may also be able to assist you in accident trend analysis, safety training programs, additional property audits, etc.

Finding a Loss Control or Workplace Safety Consultant

To engage a loss control or safety consultant, consider the following avenues:

1. Independent Consultants: Many professionals operate solo and/or collaborate with other experts tailored to client needs.
2. Insurance Carriers: Your insurance providers often have loss control departments ready to assist.
3. Brokers: Similar to carriers, insurance brokers may offer in-house loss control services.

Loss control services may already be included in your agreements with carriers and brokers.

During a conversation with a client, I discovered that the company had multiple loss control/safety visits included withinin their broker's contract, which they were unaware of.

Therefore, it's worth reviewing your agreements before seeking external help.

Many insurance carriers and brokers offer these services to their contracted clients. Although a number of loss control divisions are creating ala carte-type service menus for new clients that aren’t currently contracted for their other services.

For independent consultants, online searches, referrals, and word-of-mouth recommendations can be effective. There are also a few organizations that act as a clearinghouse for independent consultants. Many independent consultants get paid directly by the client or I have seen where they align themselves with a consultant from a broker or carrier and work through them, for their client.

In the upcoming Part 2, I will discuss the essential factors to consider when selecting a consultant for your organization, highlighting both the benefits and potential pitfalls.

Philip Farina is a keynote speaker and author. A Crime Prevention Through Environmental Design (CPTED) Practitioner, Certified by the State of Florida Attorney General’s office. A security management and workplace safety expert, he founded Risky Business, providing Florida Statute 768.0706 CPTED assessments, expert witness/litigation support and training. Philip has been proudly featured in Fox News, NBC News, CBS News Money Watch, CNN, ABC News, U.S. News Money & World Report, MSNBC, USA Today, The Washington Post, Reader's Digest, Chicago Sun-Times, Hotel Executive, American Express, Meetings and Conventions, Security Management Magazine, Chief Security Officer CSO Magazine, Police Magazine, Cosmopolitan, Private Wealth, Business Travel Executive, and SecurityInfoWatch. He can currently be found with Risky Business here www.risky-business.us

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