How to perform (or at least try) LOSS CONTROL

How to perform (or at least
try) LOSS CONTROL
Ph.D.Stefan Kovacs
E-mail: safetyinknowledge@gmail.com
2014-2015

A short presentation of basic
elements regarding loss control

Categories of losses
• People
• Motivation/Morale
• Material/Property Damage
• Environment
• Image
• Market
• Management

Categories of losses-People
• Are accountable as:
– Injuries (first aid and doctor cases)
– Days away from Work injuries;
– Loss of body parts or functions;
– Fatalities;
– Occupational illnesses;
– Disability.

Categories of losses-Motivations
• Work motivation is one of the basis for a good
functioning of every enterprise. The
diminishing of the motivation and the moral
of the personnel due to too many undesired
events is a loss that can lead to less
production, less quality, more absenteeism,
higher risk behavior, etc.

Ccategories of losses-Materials,
Property and Environment
• Material
– Loss of material: raw materials, products, contamination of
materials and end products, lower production quota,…
• Property
– Property damage, material cost of repair and replacement
of parts, expenditures of equipment, …
• Environment
– Losses due to the accidental burdening of the
environment.

Categories of losses-Image,Market,
Management
• Image
– Loss of business an goodwill, adverse publicity, Legal suits and
expenses, …
• Market
– Loss of orders, clients or market share due to loss of image or product
damage or product liability.
• Management
– Loss due to the damage of the image of management. Loss of goodwill
of management at all levels.

Loss Control Goal
• To develop and continuously measure
effectiveness of controls .
– Engineering
– PPE
– Administrative in order to:
• Eliminate;
• Minimize;
• Reduce;
• Control loss at work.

Loss Control Goal
• Inform,Commit,Communicate and Train
(ICCT) the employees regarding the necessity
to continously reduce loss taking into account
identified hazards and exposures to all
affected individuals, entities, stakeholders

Loss Control Goal
• Develop standards for loss, hazards and
exposures.
• Audit and monitor the performance
effectiveness of standards.
• Upgrade and implement
standards and controls as
may be required

WHY ?
• “THE FIRST DUTY OF BUSINESS IS TO SURVIVE
AND THE GUIDING PRINCIPAL OF BUSINESS
ECONOMICS IS NOT THE MAXIMIZATION OF
PROFIT BUT THE AVOIDANCE OF LOSS TO
PEOPLE, PROPERTY, PROFIT, PROCESS,
PRODUCTS, MATERIALS, ENVIRONMENT AND
THE COMMUNITY THEY EXIST WITHIN…”
• ©Dominic J. Brignola F.A/C.F.E., A.S.A

WHY ?
• Uncontrolled loss is turning into damage to
facilities and other property.

WHY ?
• Uncontrolled loss is turning into occupational
incidents and accidents.

WHY ?
• Uncontrolled loss is turning into a major loss
of profit from the business.

WHY ?
• To take care of the workplaces, showing employees
and clients that you are improving continously;
• To reduce loss and undesired expenses with loss;
• To prevent occupational incidents and accidents;
• To involve workers ;
• To involve management;
• To involve third parties;

How much means loss ?
• The total costs should include minimally :
– The replacement value of all equipment and
property damaged or lost
– Total claims expenditures, including legal
expenditures;
– The costs of loss prevention and control measures;
– The costs of insurance premiums;
– Lost productivity;
– Administrative and overhead
costs.

So, Loss affects:
• Business;
• Processes and activities;
• People;
• Properties;
• Products or services resulted;
• Environment;
• The surrounding community;

Followed objectives for loss control:
– Minimize exposures to financial losses
– Protect physical assets
– Reduce the frequency and severity of accidents
– Provide a safe environment for employees and the
public
– Minimize interruptions of services provided to the
public.
– Empower the employees together with the
employers;
– Make them accountable;

Loss control will prevent the damage
of the property inside the facilities

Loss control will end the ”let it
function anyway” situations

Loss control will prevent de damage
of facilities

Loss control could prevent significant
incidents and accidents

Loss can be controled
• 1. In the best cases- the loss sources can be
eliminated- so a specific loss (not all) can also
be eliminated.
• 2. With the necessary resources loss can be
minimized- if there is no possibility to
eliminate it. However, it must be seen if the
costs to minimize loss are not owerhelming
the value of loss by itself.

• 3. The real best thing regarding loss is to
control it. Losses can be controled and keept
below a reasonable threshold. Loss control
implies understanding, commitment and
cooperation.

Generic schema
for loss control

Loss can be controled in order to:
• IMPROVE EFFICIENCY;
• KEEP BUDGET ON TRACK;
• MAINTAIN PROFITABILITY;
• MAINTAIN MARKET SHARE;
• PREVENT ACCIDENTS;
• PREVENT INCIDENTS;
• REDUCE DOWN TIME;
• IMPROVE MORALE;
• REDUCE DAMAGE;

Loss should be controled
• Loss control is essentially a pro-active move.

MAIN PLAYERS
IN LOSS
CONTROL
WORKPLACEOperator
Technique
Organisation

Workplace
• Typical workplace:
– A lot of loss
– No incidents/accidents or few
Incidents/accidents;

Workplace
• Loss is a common thing at the workplace;
• Accidents are punished by the corporate
culture;
• Loss is generally accepted as long as it is not
passing over a certain threshold;

Workplace
• Loss affects:
– Primary components and sub-products used in the
production process- by over-consume, under-
consume and then not retrieving and using the
remains, deterioration under the environmnetal
conditions, etc.

Workplace
• Loss affects:
– Tools that are used in the process;
– Machines that are used in the process (unusual
damage of the machine could be also considered
as a loss result).
– Time, quality and productivity

Operators (Human Operators)
• From day one employees (operators) should
be commited to the loss reduction objective.
This comittment is generally done by:
– The training received by the operator in order to
perform at the workplace;
– The example given by the others employees at the
workplace;
– Supervision and control done by the line
management;

Operators (Human Operators)
• From day one employees (operators) should
be involved in attaining the loss reduction
objective. They should uderstand that:
– -loss control could simplify their work;
– Loss control would reduce risks regarding their
health and well being at work;
– A job well done implies loss control;

Technique
• Machines at the workplace should be
designed so to eliminate/minimize loss;
• All the technique should be properly checked
before the work so that no defective
machines are started;
• There should be complete and regular
maintenance processes;
• The employees should know their tools

Organisation
• A better organisation at the workplace would
mean a better loss control.
• Organisation should focus on the way
consumables are stored towards the
processing and also on the way finite products
are stored for deliverance.

Related causes
• Experience shows that most accidents involve
substandard behaviour (practices, condition
and a organization). And these are
only the seen part.
Behind there are the basic causes
that are connected with the
organisational culture and the general
image about the enterprise.

Model *
THE RISKS AND THE CAUSES OF ACCIDENTS

Main loss causes
• Risks in relationships with the O-T-O triad
(Operator- Technique- Organisation).

Main loss causes
• Operator
– Insufficient or incomplete training;
– Dangerous behavior;
– Lack of involvement, lack of commitment;
– Inexistent best practice
procedures;
– Lack of optimal experience;

Operator related factors
• Capability (Physical, Physiological, Mental and
Psychological);
• Stress (Physical, Physiological, Mental and
Psychological);
• Knowledge;
• Skill;
• Motivation;

Main loss causes
• Technique
– Old machines;
– Machines without proper maintenance;
– Machines with wrong processing regimes;
– Lack of control;

Technique related factors
• Engineering
• Purchasing
• Maintenance
• Inspection
• Tools and Equipment
• Excessive Wear and Tear
• Technical Hazard Analyze Process

Main loss causes
• Organization
– Lack of involvement concerning loss;
– Lack of involvement (at the managerial level)
concerning loss;
– Lack of information (similar organisations)
concerning loss;
– Improper organisational training and culture;

Organization related factors
• Leadership
• Safety System
• Contract Review
• Document Control
• Procedures/Instructions/Standards
• Control of Undesired Events
• Human Resources Management
• Accident Analysis System
• Technical Information System

Loss root causes
• Lack of involvementNot interested (it is not
mine)Lack of proper trainingHazardous
behaviourLoss
• Lack of resourcesNot significant
problemNot important problem

Loss causes
• Raw materials and products (toxic products,
combustibles, explosives, radioactive components, …)
that are entering into an unwanted contact or ar
degraded by unproper handling;
• Energies (electricity, steam, thermal fluids, pressure
vessels, kinetic energy, …) that are out of control
• Undesired or dangerous behaviour at work (strikes,
absenteeism, vandalism, alcoholism, theft, …)
• Things that are out of control and are leading towards
unexpected events at the workplace;

Loss causes
• There is a right (standard) way of doing things,
right (standard) physical conditions and a
right(standard) organization of the workplace,
so that the work can be done without
problems or undesired events – other than
the ‘accepted’ ones.

Loss causes
• Traditionally the substandard behavior
identified was the behavior of those who
where directly involved in the coming into
being of the undesired event. This was - in
case of an injury -most of the times the victim.

SUBSTANDARD ACTIONS THAT ARE
LEADING TO LOSS
• 1.OPERATING EQUIPMENT WITHOUT
AUTHORITY
• 2. FAILURE TO WARN
• 3. FAILURE TO SECURE
• 4. OPERATING AT IMPROPER SPEED
• 5. MAKING SAFETY DEVICES INOPERATIVE
• 6. USING DEFECTIVE EQUIPMENT

LEADING TO LOSS
• 7.USING (SAFE) EQUIPMENT IMPROPERLY
• 8. FAILING TO USE PPE PROPERLY
• 9. IMPROPER LOADING AND PLACEMENT
• 10. IMPROPER LIFTING
• 11. IMPROPER POSITION FOR TASK

LEADING TO LOSS
• 12. SERVICING EQUIPMENT IN OPERATION
• 13. NOT RECOGNIZING OR IMPROPER
ASSESSMENT OF A RISK
• 14. HORSEPLAY
• 15. UNDER INFLUENCE OF ALCOHOL AND/OR
OTHER DRUGS

SUBSTANDARD TECHNICAL
CONDITIONS LEADING TO LOSS
• 1.INADEQUATE GUARDS OR BARRIERS
• 2. INADEQUATE OR IMPROPER PERSONAL
PROTECTIVE EQUIPMENT
• 3. INADEQUATE OR IMPROPER COLLECTIVE
PROTECTIVE EQUIPMENT
• 4. DEFECTIVE TOOLS, EQUIPMENT OR
MATERIALS

• 5.INADEQUATE ERGONOMIC ASPECTS OF THE
WORKPLACE (lay-out)
• 6. INADEQUATE WARNING SYSTEM
• 7. POOR HOUSEKEEPING DISORDER (piles of
materials, housekeeping,...)
• 8. USED MATERIALS (chemicals)
• 9. FIRE AND EXPLOSION HAZARDS
• 10. NOISE EXPOSURE

• 11.RADIATION EXPOSURE
• 12. TEMPERATURE, MOISTURE EXTREMES
• 13. INADEQUATE OR EXCESS ILLUMINATION
• 14. INADEQUATE VENTILATION
• 15. HAZARDOUS ENVIRONMENTAL
CONDITIONS (gasses, fumes, dust, smoke, ...)

SUBSTANDARD ORGANIZATION
LEADING TO LOSS
• 1.LACK OF REFERENCE MANUAL ON THE
WORKPLACE
• 2. INCOMPLETE PROCEDURES, INSTRUCTIONS,
STANDARDS (P.I.S.)
• 3. INCORRECT P.I.S. (contradictions,
inadequate sequence of steps,...)
• 4. LACK OF CORRECT RULES AND
REGULATIONS

LEADING TO LOSS
• 5.LACK OF VISIBLE PRESENCE OF SUPERVISION
• 6. SUBSTANDARD CONTROL OF WORKPLACE
(measurement, evaluation and support of P.I.S.)
• 7. PLANNED INSPECTIONS NOT EXECUTED
ACCORDING STANDARDS
• 8. TASK ANALYSIS AND PROCEDURES NOT
EXECUTED ACCORDING STANDARDS
• 9. ACCIDENT/INCIDENT ANALYSIS NOT EXECUTED
ACCORDING STANDARDS

LEADING TO LOSS
• 10.IMPROPER CONTROL OF COMPLIANCE OF
AGREEMENTS
• 11. LACK OF MOTIVATION/COACHING BY
MANAGEMENT
• 12. PERSONAL PROTECTIVE EQUIPMENT NOT
• AVAILABLE
• 13. COLLECTIVE PROTECTIVE EQUIPMENT NOT
• AVAILABLE
• 14. CORRECT EQUIPMENT NOT AVAILABLE

SUBSTANDARD ATTRIBUTES
• Those three are interconnected. A
substandard behavior, dismounting the
machine protection cover, can lead to another
substandard behavior: working at a non-
protected machine.

ENERGY TRANSFERS THAT COULD
LEAD TO LOSS
• Struck against (running or bumping into)
• Struck by (hit by moving object)
• Caught in (pinch and nip points)
• Fall to same or lower level (slip and fall, tip over)
• Contact with (electricity, heat, cold, radiation,
caustics, toxic, noise)
• Overstress/overexertion/overload

Re-active aspects- Operator
• Reporting of accidents
• Adequate reaction of people at the moment
of the accident
• Quality of the rescue operations and first aid
• Adequate use of the equipment and resources
• Adequate transportation of the injured
• Human aspects of the medical treatment
• Rehabilitation of the injured

Re-active aspects Technique
• Quality of the equipment and tools
• Distance between the scene of the accident and
the First Aid Room
• Speed of the reaction
• Technical quality of the medical treatment
• Functioning of the technical safety devices in
order to minimize losses
• Repair and replacement of the damaged
equipment and other property damage

Re-active aspects Organization
• Internal Communication Plan
• External Communication Plan
• Rescue Plan
• Medical Service Plan
• Procedure Restricted Work, adapted work
• Insurance’s

Loss Control
Operator
Technique
Organization

Loss Control
• REQUIRES WELL THOUGHTOUT PLANNING
• Needs EFFECTIVE BUDGETING,ACCOUNTABILITY AND
RESPONSIBILITY
• Involves performant ORGANIZATIONAL
DEVELOPMENT,LEADING AND COORDINATION
• Implies ORIENTATION, COMMUNICATION, TRAINING
• Implies CONTROLING OPERATIONAL SUCCESS
THROUGH DEVELOPING OBJECTIVES
• Implies GOAL SETTING
• PLANNED, SCHEDULED AND FOCUSED AUDITING OF
CAPABILITIES TO HANDLE LOSS CONTROL

Loss evidence
• There must be evidenced:
– Any loss that is out of the normal process;
– Any loss that is significant (depending on the
process there could be considered loss
tolerances);

Loss control system
• An effective loss control system includes:
– the establishment of a an effective loss control
policy;
– assignment of responsibilities;
– ongoing review of claims data, periodic loss;
– control audits and inspections;
– accident reporting ,communication and
investigation
– development and regular review of emergency
and contingency plans

A MINIMAL PLAN FOR A LOSS
CONTROL PROGRAM
• A. MANAGEMENT STATEMENT
• B. GENERAL REQUIREMENTS
– Place of loss control into company policy;
– Procedures;
• C. LOSS CONTROL CONSULTANTS/FIELD
REPRESENTATIVES
• D. LOSS CONTROL SURVEYS/CONSULTATIONS
• E. RECOMMENDATIONS
• F. SAFETY TRAINING
• G. ACCIDENT/CLAIMS ANALYSIS

CONTROL PROGRAM
• A. MANAGEMENT STATEMENT
Just as you would expect your
policyholders to have a management
committed to loss control and the
company's safety program, we expect to have a
management statement and commitment to
provide loss control information/services to its
policyholders. This statement should be directive in
nature.

CONTROL PROGRAM
-Position of loss control into
the company's organizational structure;
-Support provided by loss control
to regional offices, branch offices or field
representatives, i.e., technical bulletins, loss control
brochures, safety/loss control posters, training
videos, analytical support, etc.

CONTROL PROGRAM
-Someone from the management still
has to be in charge of loss control.
Who is this person, and what are his duties
regarding loss control? A written document
enouncing these aspects would be usefull for the
company.

CONTROL PROGRAM
Procedures
-Employees should be made aware
on the loss control data and procedures
developed specially for this purpose.
-Requests regarding loss control should be
recorded, analyzed and transformed into best
practice procedures. If this is not possible- these
requests should be available for various inquiries
and further developments.

CONTROL PROGRAM
Procedures
-Need for Loss Control, based upon existing
risks, exposures, loss experience and
other considerations should be determined.
-Need for Loss Control should be discussed with the
employees and fine tunned with them and the
management so as to keep a proper balance.

CONTROL PROGRAM
Procedures
Investments
Results
Effort
Loss Control

CONTROL PROGRAM
• C. LOSS CONTROL CONSULTANTS
– Qualification of loss control experts: how are they
trained; what quality control measures are in
effect; what provisions have been made for
continuing education and professional
development?
– If there are third party companies used how are
the qualifications of their loss control servicing
personnel verified ?

CONTROL PROGRAM
• C. LOSS CONTROL CONSULTANTS/FIELD
REPRESENTATIVES
– What is the nature/scope of the service expected
to be performed by the contractor loss control
field personnel?
– What quality control measures are in effective
over contractor work?

CONTROL PROGRAM
• LOSS CONTROL SURVEYS/ AUDITS/
CONSULTATIONS
– Loss control audit/survey should involve the nature of
the business, exposures, prior loss experience, Best's
hazard index, premium amount or other factors
-What is the criteria for a follow-up
survey/consultation? Are the same factors taken into
consideration as for an initial survey/consultation or
do others also supply?
– What is the criteria/determining factors for placing an
account on regular, scheduled service?

CONTROL PROGRAM
• LOSS CONTROL SURVEYS/ AUDITS/ CONSULTATIONS
– The information that should be followed includes:
• Loss control program development or status.
•
• Safety committees and meetings
•
• Loss control/safety training.
•
• Management controls in place and their effectiveness.
•
• Accident analysis, accountability, responsibility.
•
• Specific hazard exposures and unsafe work procedures.
•
• Additional loss control services to be provided by your company.

CONTROL PROGRAM
• E.RECOMANDATIONS
– All the recomandations should be presented in
writing so as to act as a reference document;

ISSUES FOR A LOSS CONTROL
PROGRAM
• A Loss Control Program should contain:
– Declaration of management policy and leadership.
– Assignment of responsibility, authority, and
accountability.
– Maintenance of safe working conditions.
– Establishment of loss control training.
– Establishment of a system for significant loss/damage
reporting and investigation before incident and
accident reporting.
– Creation of medical and first aid programs.
– Employees’ acceptance of personal accountability for
their own and others’ safety.

Management
• Management has to create its Loss Control
System and the standards of it. Management
not only plans and organizes the work to be
done to meet those standards, it also
evaluates results and needs, commends and
corrects performance. This is the essence of
Management Control.

Management
• Management should incorporate these basic elements
into a formal written loss control program.
• The program should address both general and
department specific issues and should be broad
enough to include worker safety as well as other
important areas, such as:
– Completed operations (the services you provide or
functions you fulfill)
– Vehicles
– Equipment
– Property
– The general public

Management
• Management can implement the loss control program by
taking the following steps:
– Developing and communicating to employees the organization’s
safety and loss prevention policy.
– Conducting regular inspections to identify potential hazards on
all physical properties, vehicles, and operations.
– Developing and applying safety standards and procedures for all
departments and facilities.
– Educating and training employees on general loss control and
safe work procedures.
– Reviewing accidents to determine causes and to formulate
measures to prevent recurrences.
– Establishing effective means to measure employee performance
in the area of safety and to correct deficiencies.

Management
• This means too that management is responsible of
continual improving of the Loss Control System by
adding system activities and by specifying adapted
standards or criteria.
• Adequate standards are essential for adequate control.
Lack of compliance to those standards is a common
reason for lack of control.
• Developing an adequate Loss Control System and
standards is an executive function, aided by
supervisors. Maintaining compliance with those
standards is a supervisory function, aided by
executives.

Management
• Loss Control managerial actions are most
effective when focused at the point where
planned objectives and goal
tasks/responsibilities/account-abilities are
being performed…

Management
• PLOAC
– Plan for, Lead, Organize, Analyze and Control the
Risk Potential within each hazard and exposure
regarding people, property, process, material,
product, equipment, in the environment and
community they operate and exist within

Method for Loss Control
• We have developed a method that does:
– Evidence the loss at the workplace, considering:
• Materials;
• Lost time;
• Organizational and managerial problems that are
affecting loss;

– Develop a model for specific loss at the workplace,
considering all the main attributes together with the
loss action mechanism;
– Assess the loss considering the daily turnover of the
workplace/facility/enterprise: we are considering:
• Serious loss- that should be immediately stopped;
• Significant loss – that should be taken care of;
• Moderate loss- that should be monitorized;
• Not significant loss;

– Evaluate the capability to control loss inside the
enterprise/facility or workplace;
– Give specific solutions for the loss control plan
and its implementation;

Thanks,
Further details and the developed method
could be obtained by request at
safetyinknowledge@mail.com

How to perform (or at least try) LOSS CONTROL

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