Giving EHS Risk Equal Footing in Financial Discussions
More importantly, when is an EHS project with no apparent visible economic return more important than a significant capital project? How do you quantify the value of a human life, something which is priceless? How do you value the reputational risk of a significant notice of violation, not just its dollar amount?
These are questions we as EHS professionals face every day and especially every budget cycle. How do we solve this dilemma?
In my career, I have found three ways:
- Push EHS projects because "it's the law, we have to" or using the safety culture angle of "it's the right thing to do?" Important note: This works well in a positive EHS culture but gets tested hard in a down economic cycle.
- Learn to talk in financial language, and discuss EHS projects based on their return on investment. This works well for projects that are designed to clearly tackle a defined issue with a history of costs that can be used in the financial calculations as "payback." An example might be an ergonomics project to address a history (with quantified medical costs) of ergonomic-related back injuries from poor work station design.
- Work with management to define a risk matrix with culturally defines the importance of EHS risks on scales that also have financial dollar impacts. This approach moves the conversation or debate away from pure dollars to discussing relative risk and putting EHS risk on a level playing field with other business risks (while having and underlying financial metric component the financial managers can be happy with).
This is a subject I explored in more detail at the May NAEM EHS Compliance Conference in Atlanta and showed how my company utilizes a risk matrix to drive key risk decisions and how EHS risks fit prominently on the risk matrix.
About the Author
Rodney has been an EHS professional for 35 years working in diverse industries including chemicals manufacturing, surface and underground mining, heavy civil construction and offshore oil and gas production before Comcast giving him a broad perspective on EHS issues in high risk environments.