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International Diploma in Occupational

Safety and Health


Unit 3

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BSC International Diploma | Unit 3

Element 3B: Developing the Business Case for Health and


Safety

C O N T E N T S

Study Unit Title Page

3B1 Principles of Business

MAIN DRIVERS AND CONSTRAINTS IN A BUSINESS.......................................................................................... 3


COMPETING AND CONFLICTING DEMANDS...................................................................................................................... 3
MAIN DRIVERS AND CONSTRAINTS .............................................................................................................................. 3
RELEVANT PRINCIPLES OF MANAGEMENT ACCOUNTING .................................................................................. 8
COST-BENEFIT ANALYSIS ......................................................................................................................................... 8
BUDGETARY CONTROL ........................................................................................................................................... 10
BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

BSC International Diploma | Unit 3

Element 3B| Developing the Business Case for Health and


Safety

Study Unit 3B1 | Principles of Business

Learning Outcomes
When you have worked through this Study Unit, you will be able to:

Describe the main drivers and constraints in a business.

Outline the principles of management accounting.

Unit 1:

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Main Drivers and Constraints in a Business


Competing and Conflicting Demands
Organisations exist to produce the goods and services demanded of them by their customers
and clients. If they do not do this, and do it profitably, they will go out of business or, in the
case of public sector organisations, there will be political and/or management changes to
ensure that they do. Therefore, the primary objective of management, particularly in the
modern competitive and cost-conscious environment, will be to achieve these goals.
Under this way of looking at organisations, health and safety represents a cost and often a
non-productive cost in that it does not directly contribute to the efficient provision of goods
and services. As a result, in many organisations, health and safety is not a priority of
management. Rather, it may be seen as conflicting with the need to increase production, to
pursue higher sales figures or to cut costs.
In the real world, health and safety is not, in many organisations, a high priority.
There have been some well publicised cases where major British companies have been
prosecuted. Some employers have been given custodial sentences in addition to heavy fines.
The managing director of a company was sentenced to 12 months gaol for manslaughter
following the death of an apprentice in a boatyard explosion in February 2003. The 21-
year-old apprentice was using a highly flammable solvent to clean a resin storage tank
when the explosion took place. The boatyard was fined 90,000 with 10,000 costs. The
employee had not been warned about the dangers of using the chemical in a confined
space. The company and the managing director admitted failing to make a suitable and
sufficient risk assessment.
In May 2002 two steeplejacks were killed when they were engulfed in a fireball while
carrying out demolition work inside a 200ft factory chimney. The two men, who were
working for a contractor, were using hot cutting equipment to bring down the chimney
when the flammable tar coating inside the chimney ignited.
The directors of the company were originally charged with manslaughter, but the charges
were later dropped in favour of charges of breach of health and safety legislation.
Although warned of the fire risk, the directors failed to carry out a thorough and proper
risk assessment for the demolition work. They were fined 17,000 in June 2004.
The above two examples show that there is still a long way to go in changing the attitudes of
senior management.
Effective risk management involves management grades being held personally responsible for
all losses in their departments. Accident costs figure highly in this respect. A production
manager will pay greater attention to safety, if the costs of accidents are deducted from the
departments production profits and bonuses.

Main Drivers and Constraints


Customers
The nature of contracts and the relationship with customers may have profound effects on the
health and safety of a particular contract. In those circumstances where a manager feels that
he is making a loss on a particular job, there is a strong temptation to cut corners and perhaps
compromise health and safety. On the other hand, where a client takes a direct interest in the

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

progress of a contract and in achieving good standards of health and safety, the standards, for
example on a construction site, are positively improved.
Production Targets
The attainment of production goals to meet customer demands subjects operatives to intense
pressures, which can lead to stress and an increase in incidents and accidents in the
workplace. Indeed, it is well recognised that increased competition, longer hours, increased
workloads, new technology and new work patterns are prominent in the list of occupational
stressors. It is equally well known in industrial psychology that in a 'conveyor-type' operation,
the speed of the belt should be geared to the capacity of the slowest operator. The pressures
on management to attain production targets can be translated into action on the shop-floor in
a number of ways in order to increase production:
Make existing workforce work longer hours.
Increase size of existing workforce.
Pay incentive bonuses to existing workforce to increase daily rate of production.
Reduce quality of actual goods by using inferior materials.
Apart from increasing the size of the workforce, the above measures can induce a 'corner-
cutting' mentality in the workforce. For example, longer hours bring fatigue and a lessening of
attention to safety factors. Payment of bonuses for increased production can lead to the
disregarding of safe systems of work, which may slow down the speed at which the worker
can operate. Increased production expectations may cause anxiety in the slower worker,
especially if part of a team, and again short-cuts are taken in an effort to keep pace with
colleagues. Reducing quality may necessitate the introduction of new systems of work, leading
to stress.
All of these can lead to unsafe acts, which may have considerable effect on the company's
health, safety and accident record.
Resources
A major concern of senior management is the resources available to achieve the companys
objectives. These can be categorised in terms of financial, physical and human resources.
Finance
Setting up and running a company requires considerable financial investment. Once
established, the company needs to generate more income than it expends on running costs,
i.e. cost of premises, plant, wages, insurance, etc. To do this the company will set annual
budgets specifying the amount of money available to each department to support its running
costs and setting production targets to be attained. When budgets are being pared down to
economise, very often some health and safety requirements will be 'short circuited'. It is
essential that the person responsible for health and safety is prepared to fight his corner when
budgets are under discussion, to ensure that there are sufficient funds available to support
health and safety requirements. Lack of sufficient funding will inevitably lead to a lessening of
the resources required to administer health and safety effectively. To the uninitiated, health
and safety costs might appear minimal and could be easily absorbed in departmental
administration costs. To operate on this basis would be a recipe for financial disaster and
could lead to costly prosecutions for non-compliance.
The following headings give some idea of the possible range of expenditure:

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Area of Expenditure
Health and Safety Manager Full-time appointment ?
Health and Safety Consultant Contract/Part-time ?

H and S Assessments
Display Screen Equipment ?
Manual Handling Operations ?
Personal Protective ?
Equipment
Noise ?
Asbestos ?
Lead ?

Health and Safety Training


Employees - Induction/On-going ?
Competent Persons ?
First-Aid ?
Fire Marshals ?

Health and Safety Equipment


PPE ?
Monitoring - air ?
- lighting ?
- temperature/humidity ?
First-Aid Boxes ?
Evacuation Chair/s ?
First-Aid/Fire Notices ?

Library
Subscriptions to H & S Journals ?
Purchase of H & S Publications ?
Purchase of H & S Videos ?
Posters ?

Administration
Membership of H & S ?
Associations
Safety Committee Meetings ?
Health Surveillance ?
Printing - Policy ?
H & S Manuals ?

Accident Costs
Prevention ?
Investigation ?
Administration ?
Possible Expenditure on Health and Safety
A budget based on company-wide requirements is much easier to administer and control.
Training costs may sometimes be shared with other training budgets. If health and safety
budgets are administered departmentally, there is a huge temptation either to ignore health

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

and safety requirements or to divert health and safety moneys to priorities perceived as being
more urgent.
Physical Resources
The physical resources in terms of suitable plant, equipment and materials to carry out the
companys activities are an essential element of the provisions for safe working. In turn, they
are very much dependent on the financial resources available.
It is important that all materials, plant and equipment comply with the relevant specifications
and are "fit for purpose".
Human Resources
People are fundamental to meeting health and safety targets. To do this, they must have the
relevant skills and training. Additionally, there must be an adequate number of people to deal
with the tasks demanded.
People are often a limiting factor when it comes to meeting company objectives, including
health and safety ones. Inadequately trained employees or a lack of competent employees to
complete tasks safely can undermine a companys health and safety culture.
Again, human resources are very much dependent on the financial resources available to
recruit, train and reward them. Managers may face a conflict between the need to maintain a
safe and healthy workforce and a demand to cut costs to balance the budget.
Industrial Relations
Accidents and incidents have an associated direct cost, but can also influence the culture of
the organisation. Frequently occurring loss-making events can have a detrimental effect on
morale, which can lead to reductions in efficiency and higher overall costs. Consequently, a
desire to improve industrial relationships can influence the approach to risk control measures.
Trade Unions
Trade unions promote standards of health and safety in a variety of ways. These include:
Supporting their members' legal actions and setting precedents and standards.
Acting through lobby and pressure groups and thus affecting legislation.
Carrying out and sponsoring research.
Publicising health and safety matters and court decisions.
Providing seminars on health and safety subjects.
As we saw earlier, trade union safety representatives are involved as members of safety
committees and as such are actively involved in improving health and safety in the workplace.
They have a dual role in that they can be involved in the formulation of policy (in the more
enlightened companies) but they also have a policing role in as much as they can monitor
management's performance.
Employee representation has been widened to include employees who are not members of a
trade union. These employees will be represented by elected representatives of employee
safety'. Safety representatives are protected by legislation from victimisation by employers.
The risk manager may initiate actions involving safe working practice or the wearing of safety
equipment. The trade unions usually approve but may object if the workforce earnings and
production bonuses are affected.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Supply
An efficient and reliable supply chain is a vital factor in the successful operation of a business.
If components fail to arrive when they are needed or are found to be deficient in number or
quality, production will be delayed, customers inconvenienced and orders lost. Supply is
therefore of crucial importance to management.
It is also necessary to ensure, however, that suppliers meet health and safety requirements, to
minimise hazards and risks entering the organisation by this route. Controls may include
systems for checking the quality of incoming materials and ensuring supplies meet agreed
specifications. Prior to this there may be systems for choosing suppliers, i.e. to ensure that
they are reputable.
Legitimate and relevant health and safety requirements should be a significant factor in
procurement decisions.
Goods Movements
Another important aspect of a business for senior managers is the movement of goods. These
must be transported to customers at home and overseas at the right time, at the right price,
and in accordance with legal requirements. Handling, storage and transport of goods are key
areas for managers to consider.
Risk control systems will need to cover delivery and transport including packaging and
labelling. Information must be provided to those transporting, handling and storing goods
where there is any risk to their health and safety. Information may also need to be provided to
others who may be affected, such as the emergency services in the case of dangerous goods.
Cash Flow
A significant area of restraint in a business is cash flow. By this we mean the movement of
money in and out of a business. Timing is an important factor. If more money is going out
than is coming in, the business has a cash flow problem and may not be able to pay its bills.
This can be the case even when a company is selling plenty of goods. If customers fail to pay
for them on time, then there will be a shortage of cash with which to meet the companys own
obligations.
The economic state of a company is no excuse for not meeting legal standards - it can be used
as a reason for not going for a higher standard. It is not good economic sense to skimp on
safety, since all accidents produce a loss. However, a company with vast profits can afford to
spend more than one with financial restraints. Companies' economic goals will influence the
approach to risk control. These may range from simple cost covering to survive, to profit
maximisation. Risk management must balance the cost of controls against the estimated
reduction in potential loss from risks.
Cash flow is an important consideration in risk management. The accountant will want to
control finances very tightly. The risk manager must be able to make a good case for keeping
a more open budget situation and having access to open credit when required for any retained
loss.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Relevant Principles of Management Accounting


Cost-Benefit Analysis
A fundamental rule in carrying out a business activity is that the benefits obtained from it
should exceed the cost of it. This applies as much to health and safety as to other activities.
The gains can sometimes be calculated in terms of actual cost savings, but often they include
intangible items such as improved staff morale or a better public image.
The risk assessment process requires us to apply risk control measures in order to reduce
unacceptable risks to an acceptable level. A key question, and one that underpins the principle
of reasonable practicability, is how much should we spend on risk control measures before the
law of diminishing returns starts to take effect and we find that the risk reduction achieved is
insignificant compared to the cost? This is where we need to apply the principles of cost-
benefit analysis to ensure best use of our limited resources.
There are costs involved with all accidents and losses. There will also be costs involved with
accident prevention and risk reduction. It is possible to spend more on risk treatment than we
save by the reduction of the losses. This is why part of risk management is the idea of risk
retention. The cost-benefit graph is illustrated in the figure below.

POSITIVE
+ MAXIMUM BENEFIT BENEFIT
BENEFIT

0
COST OF SAFETY
NEGATIVE BENEFIT

Cost-Benefit Graph
This graph shows the position where there is maximum benefit.
When new legislation is proposed, then it will have to pass the cost-benefit test before it will
pass the consultation stage. Employers are only prepared to spend on safety measures when
they are convinced that, in the long term, it will be profitable. The safety practitioner needs to
be able to carry out such an analysis for the safety measures that he is proposing.
Categories of Costs
As we saw in Element 1A, costs associated with accidents and losses fall into four categories:
Direct costs e.g. damage to work equipment, liability claims, etc.
Indirect costs e.g. loss of business, negative company image, etc.
Insured costs e.g. equipment, employees, business loss, etc.
Uninsured costs e.g. unexpected costs like fines, damage costs due to Acts of God like
flooding or if insurance not taken out, loss of expertise, etc.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Each of these categories of cost needs to be calculated. The easiest is the direct insured
costs; a premium will be paid and any loss will (hopefully) be covered by the insurance. The
indirect but insured costs should be covered by insurance. Here the problem is that it is never
possible to ensure that the entire cost can be forecast and so insured. In any case the risk
manager will be seeking to reduce the insurance burden by retaining risks which can be
controlled in other ways.
The indirect and uninsured costs will need careful consideration, and are the costs of:
Safety administration.
Accident investigation.
First-aid and medical costs.
Lost time by the injured person.
Lost time by persons helping or affected by the accident.
Replacement labour.
Training others to take over in the event of an accident.
Loss of production.
Loss of goodwill.
Payments to the injured person.
Replacement of damaged materials.
Reductions in these costs will represent the main benefits that need to be measured.
Risk control costs can also be considered under the following terms:
Organisational
These are the costs of staff, and the time involved in investigation, records and first-aid
and medical provision.
Design
Reduction of accidents will involve engineering aspects, such as the purchase and
fabrication of safety devices. Safety systems need to be designed and programmes for
recording and costing losses will have to be tried out.
Planning
New safe methods of work, permit-to-work schemes and factory layouts could be
considered here.
Operational
Consideration must be given to the costs of running and maintaining safety systems,
maintaining guards and interlocks, providing PPE, as well as carrying out sampling and
testing.
Conducting a Cost-Benefit Analysis
In order to carry out a cost-benefit analysis, we need to find answers to questions such as:
What will it cost to eliminate or reduce the risk?
What capital expenditure is necessary, e.g. for new equipment?

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

What on-going costs will be needed, e.g. for maintenance, replacements, consumables?
Will additional training be required? At what cost?
Over what period of time can we recoup the costs? Is five years a reasonable estimate?
Have we considered all the alternative methods, and chosen the most cost-effective way
of treating the risk?
Do our methods pass the test of reasonably practicable?
The benefits which we can offset against these costs can be listed, and costed, and should
include:
Fewer insurance claims, so there will be a case for negotiating reduced premiums, or
retaining losses.
Fewer accidents.
Less damage losses.
Fewer health problems and less time off work.
Lower training costs to replace workers who have accidents.
Better production rates.
Better staff morale and motivation levels.

Budgetary Control
Definitions
Budget
The UK Chartered Institute of Management Accountants (CIMA) defines a budget as:
A plan quantified in monetary terms, prepared and approved prior to a defined period of
time, usually showing planned income to be generated and/or expenditure to be incurred
during that period and the capital to be employed to attain a given objective.
A budget is therefore an agreed plan which evaluates in financial terms the various targets set
by a companys management. It includes a forecast profit and loss account, balance sheet,
accounting ratios and cash flow statements which are often analysed by individual months to
facilitate control.
Budgets are normally constructed within the broader framework of a companys long-term
strategic plan covering the next five and ten years. This strategic plan sets out the companys
long-term objectives, whilst the budget details the actions that must be taken during the
following year to ensure that its short- and long-term goals are achieved.
Budgetary Control
The CIMA definition of budgetary control is:
The establishment of budgets relating the responsibilities of executives to the
requirements of a policy, and the continuous comparison of actual with budgeted results,
either to secure by individual action the objective of that policy or to provide a basis for its
revision.
Companies aim to achieve objectives by constantly comparing actual performance against
budget. Differences between actual performance and budget are called variances. An

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

adverse variance tends to reduce profit and a favourable variance tends to improve
profitability.
Budgetary control therefore allows management to review variances in order to identify
aspects of the business that are performing better or worse than expected. In this way a
company will be able to monitor its sales performance, expenditure levels, capital expenditure
projects, cash flow, and asset and liability levels. Corrective action will be taken to reduce the
impact of adverse trends.
Advantages of Budgetary Control Systems
Agreed Targets
Budgets establish targets for each aspect of a companys operations. These targets are
set in conjunction with each manager. In this way managers are committed to achieving
their budgets. This commitment also acts as a motivator.
For example, an agreed target in the health and safety budget could be that an external
consultant will carry out a number of health and safety departmental audits for an agreed
fee within the financial year. If the budget is cleared and reset in the next financial year,
as happens in many public organisations, then there is a strong incentive to get the work
completed and the money spent before the end of that financial year.
Problems Identified
Budgets systematically examine all aspects of the business and identify factors that may
prevent a company achieving its objectives.
Problems are identified well in advance, which in turn allows a company to take the
necessary corrective action to alleviate the difficulty. For example, a budget may indicate
that the company will run short of cash during the winter period because of the seasonal
nature of the service being provided. By anticipating this position the company should be
able to take corrective action or arrange additional financing.
Often health and safety monitoring (either proactive or reactive) will identify problems
which need immediate action and financial resources to resolve. The unexpected
discovery of asbestos during routine building work (reactive) is a common example of this
(although detailed asbestos registers should now be in place!). Non-compliance could
result in breaches of health and safety law, so often organisations hold health and safety
contingency funds to ensure that funds are available to deal with the unexpected.
Sometimes the contingency fund can be seen by departments as additional money for
routine health and safety issues, so it is essential that it is only used for contingencies.
Scope for Improvement Identified
Budgets will identify all those areas that can be improved, thereby increasing efficiency
and profitability.
Positive plans for improving efficiency can be formulated and built into the agreed budget.
In this way, a company can ensure that its plans for improvement are actually
implemented.
The concept of continuous improvement in health and safety aligned to performance
measurement, and the health and safety plan to achieve improvements, is a key concept.
However, the main barrier to achieving the objectives in the health and safety plan is
often lack of resources and, consequently, it is essential that the plan is adequately
resourced within the overall budget.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Improved Co-ordination
All managers will be given an outline of the companys objectives for the following year.
Each manager will then be asked to formulate plans so as to ensure that the companys
overall objectives are achieved.
All the managers plans will be combined and evaluated so that a total budget for the
company can be prepared. During this process the company will ensure that each
individual plan fits in with the company's overall objectives.
This process can be extended to the requirement for departmental planning in order to
achieve the organisations health and safety policy objectives. Departmental health and
safety plans are approved by senior managers who hold the local budgets, then combined
into the corporate health and safety plan, with a cumulative budget allocated to it.
Control
It is essential for a company to achieve its budget. Achievement of budget will be aided
by the use of a budgetary control system which constantly monitors actual performance
against the budget. All variances will be monitored and positive action taken in order to
correct those areas of the business that are failing to perform.
Routine health and safety budgets for consumables such as PPE and first-aid provision can
be monitored and controlled reasonably easily on a routine basis. Project budgets for
more major developmental work such as the installation of local exhaust ventilation or
improved fire precautions may be more difficult to control, since complex projects are
notorious for overspending and overrunning.
Raising Finance
Any provider of finance will want to satisfy itself that the company is being managed
correctly and that a loan will be repaid and interest commitments honoured. The fact that
a company has established a system of budgetary control will help to demonstrate that it
is being managed correctly. The budget will also show that the company is able to meet
all its commitments.
Arguing the case for health and safety funding should be easier than for other budget
headings, since the moral, legal and economic reasons for effective health and safety
management should speak for themselves. However, health and safety is often used (and
misused) as a reason to justify a tenuous request for resources (redecorating to improve
the welfare of staff) and consequently crying wolf too often can turn budget holders
against health and safety requests.
Planning and Achieving Company Objectives
This may seem an obvious point but it is one often missed by students - budgeting plays a
major part in an organisations planning process and in attempting to achieve its
objectives, by formally setting down what is to be done in each period.
The allocation of financial resources to the health and safety programme is a positive
indicator and the fact that the programme can be seen to be well resourced is the sign of
a positive health and safety culture.
Communication
The formal presentation of the budget to managers helps to communicate to them what is
expected of them. If the company adopts a two-way budgeting process with ideas

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

flowing both up and down the organisation then communication between the different
layers of the organisation is increased in both directions.
Further to the previous point, the communication of the funding that has been allocated
to the health and safety programme publicises this positive indicator and can act as a
further stimulator to the development of a positive health and safety culture.
Motivation
Budgets can help to motivate employees and managers to achieve high standards;
however, badly-set budgets can have a demotivating effect.
It is certainly the case that underfunding of the health and safety programme is a clear
indication of lack of management commitment to the health and safety policy objectives.
It is essential that in the health and safety policy statement there is some reference to
commitment to provision of adequate resources to support the health and safety
programme. This gives staff the signal that the chief executive is prepared to put money
where his mouth is and acts as a key motivator for the programme as a whole.

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BSC International Diploma | Unit 3

Element 3B: Developing the Business Case for Health and


Safety

C O N T E N T S

Study Unit Title Page

3B2 Strategies for Managing Risk

PRINCIPLES OF RISK MANAGEMENT .................................................................................................................. 3


MAINTAINING A SOUND SYSTEM OF INTERNAL CONTROL.................................................................................................... 3
REVIEWING THE EFFECTIVENESS OF INTERNAL CONTROL ................................................................................................... 4
THE BOARDS STATEMENT ON INTERNAL CONTROL........................................................................................................... 4
INTERNAL AUDIT ................................................................................................................................................... 4
ADDING VALUE BY LINKING RISK AND CONTROL WITH BUSINESS OBJECTIVES .......................................................................... 5
APPLY THE FUNDAMENTALS OF GOOD RISK MANAGEMENT AND INTERNAL CONTROL ................................................................... 7
BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

BSC International Diploma | Unit 3

Element 3B| Developing the Business Case for Health and


Safety

Study Unit 3B2 | Strategies for Managing Risk

Learning Outcomes
When you have worked through this Study Unit, you will be able to:

Apply the principles of risk management.

Unit 2:

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Principles of Risk Management


Best practice suggests that companies should identify, evaluate and manage their significant
risks to assess the effectiveness of the related internal control systems. It also suggests that
the boards of directors review the effectiveness of their system of internal control and
undertake an annual assessment for the purpose of making a statement regarding internal
control within the company's annual report.
In essence, the point and purpose of these recommendations is to ensure that directors take
responsibility for adequate risk management. If they do not do so, they must disclose the fact
to their shareholders, and risk the effect that this may have on the reputation of their company
and the stock market.
The recommendation are outlined in guidance published in the UK by the Institute of
Chartered Accountants in England and Wales (ICAEW) entitled Internal control; guidance for
directors on the combined code commonly known as the Turnbull report. The key areas of
the combined code are as follows:
Maintaining a Sound System of Internal Control
Responsibilities
The board of directors is responsible for the companys system of internal control and should
set appropriate policies and ensure that the system of internal control is effective in managing
risks in the manner which it has approved.
Factors to consider should include:
The nature and extent of the risks facing the company.
The extent and categories of risk which the board regards as acceptable for the company
to bear.
The likelihood of the risks concerned materialising.
The companys ability to reduce the incidence and impact on the business of the risks that
do materialise.
The costs of operating particular controls relative to the benefit thereby obtained in
managing the related risks.
Elements of a Sound System of Internal Control
These comprise:
Control activities.
Information and communications processes.
Processes for monitoring the continuing effectiveness of the system of internal control.
The system should:
Be embedded in the operations of the company and form part of its culture.
Be capable of responding quickly to evolving risks to the business arising from factors
within the company and changes in the business environment.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Include procedures for reporting immediately to appropriate levels of management any


significant control failings or weaknesses that are identified, together with details of
corrective action being undertaken.

Reviewing the Effectiveness of Internal Control


Responsibilities
Reviewing the effectiveness of internal control is an essential part of the boards responsibilities
and the role of the board committees in the review process, including that of the audit
committee, is for the board to decide.
The Process of Reviewing Effectiveness
Effective monitoring on a continuous basis is an essential component of a sound system of
internal control. The board should regularly receive and review reports on internal control and
should also undertake an annual assessment.
When reviewing reports during the year, the board should:
Consider what are the significant risks and assess how they have been identified,
evaluated and managed.
Assess the effectiveness of the related system of internal control in managing the
significant risks, having regard, in particular, to any significant failings or weaknesses in
internal control that have been reported.
Consider whether necessary actions are being taken promptly to remedy any significant
failings or weaknesses.
Consider whether the findings indicate a need for more extensive monitoring of the
system of internal control.
The boards annual assessment should consider:
Changes since the last annual assessment in the nature and extent of significant risks and
the companys ability to respond to changes in business and the external environment.
The scope and quality of managements on-going monitoring of risks and of the system of
internal control, and, where applicable, the work of its internal audit function and other
providers of assurance.
The extent and frequency of communication of the results of monitoring to the board (or
board committees), which enables it to build up a cumulative assessment of the state of
control in the company and the effectiveness with which risk is being managed.
The incidence of significant control failings or weaknesses.
The effectiveness of the companys public reporting processes.
The Boards Statement on Internal Control
The board should produce a narrative statement on internal control that discloses that there is
an on-going process for identifying, evaluating and managing the significant risks faced by the
company, that it has been in place for the year under review and that it is regularly reviewed
by the board.
Internal Audit
The need for an internal audit function will vary depending on the scale, diversity and
complexity of the companys activities, and the number of employees. Cost-benefit

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

considerations will also have to be taken into account. In the absence of an internal audit
function, management needs to apply other monitoring processes in order to assure itself and
the board that the system of internal control is functioning as intended.

Adding Value by Linking Risk and Control with Business


Objectives
The sequence of actions in the following diagram set out a cycle to put the Combined Code
into effect by focusing on fulfilling objectives through better management of risk:

Identify key internal and


external changes and
reconsider and agree clear
objectives.

Take steps to improve.

Identify critical success


factors.

Review risk control


regularly and prior to year-
end reporting.
Identify and prioritise risk.

Succinct reporting.
Determine which risks are
significant.

Sources of assurance.

Agree control strategies


and risk management
Monitoring of significant
policy.
aspects of internal control.

Early warning mechanisms.


Agree accountability.

Consultation and greater


risk awareness.
Changes in behaviour and
focus on the fundamentals
of good risk management
and internal control.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Immediate Actions to Take


Develop the right attitude to risk management and internal control and avoid unnecessary
complexity and cost by:
Putting primary focus on significant risks and related controls.
Ensuring that objectives are prioritised.
Avoiding duplication.
Allocating risk management responsibilities to individuals.
Keeping reports to the board succinct and avoiding complexity.
Avoiding huge paper chases.
Producing a proper project plan and monitoring progress.
Reorienting training around the significant risks.
The successive steps in the project involve two stages:
An Initial Stage
1. Allocate responsibility for developing the paper and plan to an individual or small team.
2. Obtain buy-in of key directors to the plan.
3. Consideration of paper by the board.
4. If necessary, reconsideration and refinement of plan by the board.
5. Start implementation of plan at the top and develop risk management policy.
The On-going Stage
6. Embed in successive levels of the company.
7. Put in place a proper reporting mechanism.
8. Aim for business improvement and not merely good disclosure.
The process of identifying risks requires:
Understanding the businesss services and products.
Knowing the marketplace.
Considering the business process risks.
Considering how people might behave in different situations.
Considering the quality of the local management team.
Thinking about the changing external environment.
Risks to consider can be grouped under the following headings:
Business, e.g. too slow to innovate.
Financial, e.g. overtrading.
Compliance, e.g. health and safety risks.
Operational and other, e.g. physical disasters (including fire and explosion).
Risks can be simply prioritised as shown in the following diagram:

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Impact High impact High impact


of Low likelihood High likelihood
Risk

B A
Low impact Low impact
Low likelihood High likelihood

D C
Likelihood
of
Risk
Occurring

Prioritisation of Risk
They are then actioned as follows:
A Immediate action.
B Consider action and have a contingency plan.
C Consider action.
D Keep under periodic review.

Apply the Fundamentals of Good Risk Management and Internal


Control
The fundamental principles are:
Keeping it simple.
Risk awareness.
Fundamental controls, e.g. financial controls.
Consultation throughout the company.
Continual application of control strategies.
Awareness of business objectives.
Early warning mechanisms and quick responses.
Reliable business information.
Emphasis on changing behaviour.

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BSC International Diploma | Unit 3

Element 3B: Developing the Business Case for Health and


Safety

C O N T E N T S

Study Unit Title Page

3B3 Business Risks

RISKS TO A BUSINESS ........................................................................................................................................ 3


TYPES OF RISK ...................................................................................................................................................... 3
EFFECTS OF LOSSES ................................................................................................................................................ 7
IMPORTANCE OF HEALTH AND SAFETY MANAGEMENT IN RISK CONTROL.................................................................................. 7
TOLERABILITY OF RISK ...................................................................................................................................... 9
SOME PROBLEMS TO CONSIDER .................................................................................................................................. 9
CATEGORISATION AND PRIORITISATION OF RISK ........................................................................................................... 10
RELATIVISTIC AND PROBABILISTIC METHODS OF RISK RATING .......................................................................................... 13
BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

BSC International Diploma | Unit 3

Element 3B| Developing the Business Case for Health and


Safety

Study Unit 3B3 | Business Risks

Learning Outcomes
When you have worked through this Study Unit, you will be able to:

Outline the main risks to a business.

Explain the meaning of tolerability of risk.

Unit 3:

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Risks to a Business
Risk is present whenever human beings cannot control events which affect them, or cannot
foresee the future. For example, a company which owns a factory, runs the risk of the
property being damaged by fire, struck by lightning, or burgled. Similarly, a businessman
starting a new business cannot guarantee that he will be successful, that is make a profit
rather than a loss.

Types of Risk
Risks can be categorised by their effects or their outcomes:
Risks categorised by their effects are described as either fundamental or particular
risk.
Fundamental risk affects society in general or groups of people, and it
cannot be controlled by any one person. Examples are natural disasters such
as storms and floods, and inflation or unemployment.
Particular risk is one which we, as individuals, can partially control. For
example, we decide to tackle a fire or to enter a building site or to speak to a
potentially violent customer.
Risks categorised by their outcomes are known as pure and speculative risks.
Pure risk is a situation where, if the event occurs, only loss or damage can
follow. For example in a fire, the only possible outcome is loss or damage to
property and/or injury to persons.
Speculative risk occurs where there is a chance of a gain as well as a loss.
For example, a business venture may make either a profit or a loss. This type
of risk is sometimes known as entrepreneurial risk.
Businesses face a variety of risks all the time. There are:
Physical risks from events such as fire, flooding, explosions, earthquakes, etc. We can
often insure against them, which means that in return for a premium, the insurer assumes
the likely financial cost. Insurance premiums are based on the predicted frequency of an
event and the likely cost.
Financial risks where, for example, future returns of a project are difficult to predict, or
where a project might not yield expected returns because of fluctuations in currency
values.
Political risks when an organisation does business in a volatile political environment,
where nationalisation or sanctions might be imposed or where civil war might break out.
There are, of course, many more risks that businesses face and in order to make an informed
decision, they have to be assessed and somehow taken into account when making a decision.
Financial Risks
The financial risks to a business are many and varied:
Investments may not yield the return expected.
The value of currencies may fluctuate.
Inflation may reduce the value of money in real terms.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Capital depreciation may lead to an inability to replace equipment.


Overtrading may create a crisis in cash flow.
Reduced sales income may mean an inability to pay wages.
Economic crises in other countries may cause the withholding of funds.
Failed projects may result in expenditure without income.
Lack of investment and an aging product offering may end in insolvency, as in the case of
MG Rover.
Human Resources
People are a companys key assets, but they are also a source of risk:
Key people may decide to leave the business or may be absent for a long period due to
illness.
The company may be unable to recruit skilled personnel due to local shortages or
competition.
The workforce may be aging and the job unattractive to young people.
Human resources management may fail to plan sufficiently for succession as older
workers retire.
There may be a shortage of staff during busy periods due to sickness, holidays or over-
commitment.
A high turnover of staff may cause inefficiency and lower morale.
Product Liability
A manufacturer owes a duty of care to suppliers and consumers.
In an advanced economy a huge range of products are designed, manufactured and supplied.
These processes may be carried out by an individual company but are more likely to involve a
chain of companies. There may then be a series of companies or individuals that handle the
product as it is put into circulation:
Manufacturer.
Wholesaler.
Retailer.
Purchaser.
User.
If the product is defective there might be harm to the user, other damage to property and loss
of production.
Relationship Between Producer and Vendor
A producer is one who produces an article for use, whereas a vendor is one who sells. The
producer therefore supplies the vendor with the articles for sale. The producer must ensure
that the article complies with relevant legislation and standards and is "fit for purpose". Any
person injured due to a defective product can sue the producer.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Relationship Between Vendor and Consumer


A consumer is a user of an article or a purchaser of goods or services. The vendor neither
amends nor makes a product but merely sells it to the consumer. The vendor, however, may
be liable in tort if he is under a duty to inspect the goods and fails to do so. A second-hand
car dealer, for example, would be expected to identify a defect which rendered a car
dangerous.
Public Liability
Occupiers owe a common duty of care to all visitors, i.e. a duty to take such care as is
reasonable (given the circumstances) to see that visitors will be reasonably safe; in using the
premises for the purposes for which they are invited or permitted to be there. The employer
(or occupier) must be prepared for children to be less careful than adults. This includes the
need to foresee the attractiveness of every day work things that may be considered
allurements.
An occupier may expect that persons, in the exercise of their calling, will appreciate and guard
against any special risks ordinarily incident to that calling.
It is therefore advisable, that to minimise and manage the risk from public liability, that public
liability insurance is taken out.
Business Reputation
Business experience suggests that it is easier to retain existing customers than to secure new
ones. In the same way, it is easier for a company to build on a good reputation than to try to
repair a damaged one. Companies may strive for quality of products or services to create and
maintain their reputation in the eyes of consumers and devote resources to public relations to
enhance their reputation with the public.
You will know from your own experience, however, how easy it is for an organisation to lose its
reputation overnight when something goes wrong:
A faulty product may cause injury to innocent purchasers.
A company may be found guilty of sex discrimination against an employee.
An accident that could have been avoided may cause fatalities.
An oil spill may pollute an environmentally sensitive area.
Such events can lead to consumer boycotts and action by pressure groups against the
organisation.
The reputation of a business can also be damaged by false accusations. An example would be
an employee taking revenge on an organisation following his legal dismissal.
Business Interruption
Emergency situations can occur at any time. How an organisation deals with that emergency,
however, can dictate whether the emergency turns into a disaster or not. Historically there
have been a number of disasters that could easily have been prevented or where the
consequence could have been much less, had appropriate safeguards or emergency planning
been in place. For these reasons, it is imperative that all organisations prepare themselves for
emergency situations. Action should be considered in terms of: prevention of loss, early
warning of loss and minimising the consequences of loss.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

A fire, for example, can be devastating in terms of damage and personal injury and prevent
business activities from continuing or even resuming. For this reason, it is vital that an
organisation considers prevention as the first option. Consideration must also, of course, be
given to raising the alarm, escape routes from the site/building as well as the means for
tackling a fire.
Fire prevention involves various factors from the design of the building through to layout and
housekeeping. Obviously the risk from fire must be considered and this will depend on the
activities carried out on the premises. Other areas that must not be forgotten, however, are
the risks from a discarded cigarette, for example, and arson.
Environmental Breaches
The by-products of a process may constitute a risk to the environment, e.g. discharge of
effluent into rivers, emission of gases into the atmosphere, accumulation of waste products for
disposal, etc. There may also be off-site risks arising from an organisation's work activities at
both fixed and transient sites.
A sudden loss of containment from pipework, pumps and storage or process vessels could
result in damage to plant and equipment, injury to personnel and/or damage to the
environment. For these reasons, it is important to have an emergency plan where the
emergency measures are determined by risk assessment. The risk assessment should consider
the type of material/substance that may be lost, e.g. water from a burst water pipe,
hydrochloric acid from a storage vessel or chlorine gas from a process vessel, and the specific
effects that these may have should they no longer be contained. It is vital that environmental
issues are looked at in detail, especially where there is a risk that toxic materials may enter the
local watercourses or where toxic vapours could affect the local community.
The emergency plan needs to include: raising the alarm, evacuation procedures (for the site
and the surrounding areas, where necessary), limiting the extent of the 'spillage' (if it is safe to
do so), informing other relevant parties, e.g. the environmental agency, local water authority,
fire brigade, etc., and considering how the clean-up process may be undertaken.
Security
Unfortunately, in the current climate explosive devices are often at the forefront of our minds.
For this reason, it is important that thought is given to preventing explosive devices being
planted in the first place, and also what controls should be in place to minimise damage and
injury should an explosion occur.
Sites should be designed so as to remove potential hiding places for explosive devices and to
aid regular security checks. A system should be in place to evacuate the site should a suspect
package be found or if a warning is received. Employees must be vigilant and must be trained
in procedures relating to finding a suspect package, raising the alarm and evacuation.
Additionally, good security systems on entering the site are important so as to prevent
unauthorised personnel gaining entry.
Information also represents a security risk to a business. Loss of vital and/or sensitive data
through theft or hacking into computer systems can constitute a serious setback.
Health and Safety
Deficiencies in the area of health and safety are a significant risk to a business in their own
right, as well as contributing to the other types of business risk we have already identified.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

At best they will impede efficiency and reliability and have a negative effect on the attitudes of
staff. In the worst case scenario, heavy fines and the possible imprisonment of a key director
could threaten business survival.

Effects of Losses
All the risks we have described involve the organisation in losses. These, in turn, will inevitably
affect the profitability of the business. They may even mean that the business is no longer
viable. Risk control is therefore an essential element of good management.
Importance of Health and Safety Management in Risk Control
The management of health and safety is a function of management no less important than the
management of production, purchasing, sales, human resources, etc. It is essential that the
importance of good health and safety management is understood by top-level management
and their commitment displayed by:
Producing a health and safety policy.
Establishing a safety committee, where appropriate.
Ensuring they have appointed personnel who are competent in fulfilling the requirements
of health and safety legislation.
Appointing and consulting safety representatives.
Setting up suitable training programmes for their employees.
Ensuring health and safety is an agenda item at all management meetings.
Integrated Management Systems
For organisations wishing to have control over more than one aspect of risk management, e.g.
safety, environment and quality, it may be possible to implement an integrated management
system (IMS) rather than individual systems. Though it may make sense in theory,
implementing an IMS is not an easy task, and there are a variety of factors to be taken into
account.
Arguments For Integration
A well-planned IMS is likely to operate more cost-effectively than separate systems, and
facilitate decision-making that best reflects the overall needs of the organisation.
An IMS offers the prospect of more rewarding career opportunities for specialists in each
discipline.
The objectives and processes of management systems are essentially the same.
Integration should lead to the avoidance of duplication, for example: in personnel,
meetings, electronic record-keeping software, audits and paperwork.
Integration should reduce the possibility of resolving problems at the expense of creating
new difficulties in other disciplines.
An IMS should involve timely overall system reviews, where momentum in one element of
an IMS may drive forward other elements that might otherwise stagnate. In contrast,
independent systems could develop without regard to other management system
elements, leading to increasing incompatibility.
A positive culture in one discipline may be carried over to others.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Arguments Against Integration


Existing systems may work well already. Integration may threaten the coherence and
consistency of current arrangements that have the support of everyone involved.
Relevant specialists may continue to concentrate on the area of their core expertise and
further specialist training may not be needed.
Uncertainties regarding key terms already a problem in health and safety would be
exacerbated in an IMS.
System requirements may vary across topics covered, e.g. an organisation may require a
simple quality system, but a more complex health and safety or environmental
performance system. An IMS could introduce unreasonable bureaucracy into, in this case,
quality management.
Health, safety and environmental performance are underpinned by law, but quality
management system requirements are largely determined by customer specification.
Regulators and single-topic auditors may have difficulty evaluating their part of the IMS
when it is interwoven with other parts of no concern to the evaluator.
A powerful, integrated team may reduce the ownership of the topics by line management.
A negative culture in one topic may unwittingly be carried over to others.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Tolerability of Risk
Before we look at tolerability of risk it is important that we understand the concept behind the
term tolerability. Tolerability is the manner in which we tolerate or endure something.
Everyone has a different subjective perception of certain risks and, therefore, depending on
how they view these risks will ultimately depend on how much they are willing to tolerate,
endure or accept them. For example, some people will not tolerate the risk from flying in an
aeroplane as they see the risk to be too high and as a result will not fly, although other people
are completely different and are willing to take the risk and therefore tolerate it. The
majority of people see the benefit of having a nice holiday overrides the risk of flying. It
should also be remembered that a persons perception of risk may be clouded by inaccuracies
and therefore objective assessment of risk needs to be taken into account. The mathematical
probability of being involved in an aeroplane crash is very small and thus this should be taken
into account when assessing if a risk should be tolerated or accepted.
The probability of death as a result of a road accident has a risk factor of one in 100,000 per
individual life span. We could perhaps regard this risk level as acceptable within the
community. We are not doing a great deal to reduce it, so this seems to be a tolerable level of
risk. Should we accept this as the risk standard for industrial accidents?
Probably not. The actual standard for fatalities at work is much lower than this. Perception of
risk is a very important concept, governed by both social and cultural conditions. Often when
the media are reporting a particular accident or catastrophe, the reporter will ask: "Can you
be sure that such an event will never happen again?" As a safety practitioner, in a high risk
area, you might be the one answering such a question. You might suggest that you had
learned the lessons from this event and that, on the balance of probabilities, the risk of a
recurrence was now less than one in 100,000.
Tolerable risks vary from condition to condition. Radiation risks from a nuclear reprocessing
plant are probably less than the radiation risks from the granite of the Scottish highlands, or
from sunbathing in the South of France. The fact that one form of radiation is natural, while
the other is man-made, does not increase the risk.
Accident statistics show that coal mining has a lower risk rate than construction work on a
building site, yet the building site poses a more acceptable risk in the eyes of many. Very few
people die, or are permanently injured, in chemical works, or from the use of pesticides in
agriculture, but these are perceived as being high risk activities. The use of chemicals in the
home is a higher risk activity but is not perceived as such.
The safety practitioner does not have problems with such wrong concepts, or does he? It is
possible to feel 'safer' in a coal mine, or a cave or other confined space, than when visiting a
steel works or a factory. It is what we are used to or conditioned to; familiar hazards always
appear less threatening than those that we do not understand.

Some Problems to Consider


Some other problems which can be considered under the context of perception of risk are:
Individual and average risk.
Injury risk.
Risks to members of the public.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Individual and Average Risk


Industrial rates usually give the average risk for particular industries. The fatal accident rate is
defined as the number of fatalities in a group of 1,000 workers in a working lifetime (108
hours). It can be calculated by dividing the number of fatalities into the number of employees
and then multiplying by 1,000. While this will give a comparable rate for different industries,
there will always be individuals who are at greater risk. Therefore it is not enough to reduce
the average risk, but rather to reduce to a minimum the risk of the most exposed individual.
Injury Risk
The problem with injury risk is that we have to include some measure of severity. This divides
up any data into major and minor injuries. Time off work is not a good measure because
some individuals work with an injury while others take a long time to return to work after a
minor scratch.
Risks to Members of the Public
To some extent employees can be regarded as having 'volunteered' to accept a particular level
of risk. The risk to members of the public needs to be lower than this. However, there are
some risks which members of the public also accept, examples of these being:

Activity Deaths per 108 Hours Exposed


Staying at home 3
Travel by bus 3
train 5
car 57
motor-cycle 660
Other Risks Deaths per Person Per Year
Playing football 0.00004
Car driving 0.00017
Smoking (20 cigarettes a day) 0.00500
Struck by lightning (UK) 0.0000001
Fire (UK) 0.0000150
Categorisation and Prioritisation of Risk
Having identified the hazards in a work situation, we now need to calculate the risk that these
pose.
While there is no set formula for rating Hazard and Risk, a number of techniques are available
to assist in the process. These range from the use of numbers to quantify risk, to purely
subjective, 'gut feeling' responses.
It has been said: "If you can't measure it, then you can't manage it"; and it certainly makes
life a lot easier if you have something tangible to work with, rather than trying to grasp
something that is floating around in the ether. It also provides better evidence, if required, at
a later date.
One way of categorising risks is as 'high', 'medium' or 'low'. However, there are several
interpretations of these terms. If Risk is accepted as the likelihood of harm being realised, the
following Best Practice definitions apply:

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

High "Where it is certain or near certain that harm will occur" (95% will certainly be
affected).
Medium "Where harm will often occur" (majority will be affected).
Low "Where harm will seldom occur" (95% will not be affected).
Prioritisation
There will be a limit to those company finances that can be used to deal with hazards and so
make a perfectly safe working environment. It is usually much safer to employ robots and
dispense with human operators, but this may not be desirable, or cost-effective. So we need
to target resources to deal with those hazards that pose the greatest threat first, while lesser
problems can wait until later. Health and safety legislation uses the term "reasonably
practicable", and this term has a precise legal definition. The process of putting problems into
order of solution is known as prioritisation, i.e. we get our priorities right.
We need some method for measuring risk, as required by a "suitable and sufficient risk
assessment". The basic formula for risk measurement is:
Risk measurement = Probability (or Frequency) Severity
Probability
This is the chance that a given event will take place. It is a fairly simple concept when
considering chance events such as throwing dice:
m
P (A) =
n
Number of results giving A
Probability of event A =
Total number of results
For example, the probability of throwing a six is one in six, or one sixth.
The probability of a loss-making event, such as a personal injury or damage to a piece of
machinery, can be determined from company statistics for the industry, country or the whole
world. Company statistics will be more relevant, but the small numbers make them statistically
less valid than the larger numbers of world statistics. Sometimes it is only possible to make a
subjective judgment as to whether the probability is negligible, low, moderate, high or definite.
Frequency
The frequency with which an event may be expected to occur is also based on statistical,
analytical techniques. Usually it can be regarded as identical to probability. However, some
evaluation techniques take into account the number of persons who are at risk, or the time
interval between expected loss-making events, and give this as frequency. In other cases,
frequency can only be assessed on the basis of negligible, low, moderate, high and definite.
Severity
In measuring potential losses, both indirect and direct losses must be considered.
Direct Losses
Some of these are easy, e.g. loss of cash, liability claims, agreed damages, fees.
We have more of a problem, however, when we consider machinery damage. Do we take
the cost as:

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

New for old replacement?


Second-hand value (buying price or selling price)?
Book value (cost less depreciation)?
Net present value to the firm, e.g. the future net earnings which may be lost?
Look at the list and decide which would be correct. Do you think there might be a case
for more than one?
Actually, any of them could be used in certain circumstances, but the resulting cost will be
very different.
Indirect Losses
These include such items as:
Loss of production time.
Sales.
Contribution to overheads.
Worsening of industrial relations.
Possible new legislation (most legislation is the result of past incidents).
We would find it easy to determine the frequency of small, relatively minor accidents (which
have a low priority); more difficult for medium risks, because they occur less often; and almost
impossible to determine any frequency for disasters. It is the medium risks with high costs
which are going to be our main concern.
We need to have a reliable cost for an injury accident, and for damage accidents. This will
usually involve filling in an accident cost sheet. The following is an example of such a form.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

ACCIDENT COST SHEET


Location
Manager or Supervisor
Description of Accident

Type of Accident: Lost-time injury/Non-lost-time injury/ Damage/(delete those not


applicable)

Details of injury to employee(s) and/or damage to plant, equipment or materials


Date of accident
Number of days lost (lost-time injuries only)

Cost Element
1. Safety administration costs.
2. Medical centre costs.
3. Cost of lost time of injured employee.
4. Cost of lost time of other employees.
5. Cost of replacement labour.
6. Costs of welfare (or other) payments (made by company) to
employee.
7. Cost of lost production.
8. Cost of repair/replacement of damaged plant/equipment.
(a) Labour cost.
(b) Materials cost.
9. Cost of damaged materials.
10. Other costs.
Total
Accident Cost Sheet

Relativistic and Probabilistic Methods of Risk Rating


Risks can be rated by comparison of one industry with another. In the past, much UK
legislation was directed towards industries like coal mining and factories. An alternative
approach is to estimate risks, reduce them, and then calculate the residual risks.
Quantified Risk Assessment (QRA)
Probabilistic (or quantified) risk assessment ascribes a numerical figure to risk arising from
plant or equipment. However, it is difficult to utilise the technique to incorporate factors such
as 'human error' and 'political considerations'.

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Quantified Risk Assessment (or Probabilistic Risk Assessment) enables designers, operators or
regulators of industrial plant or equipment to estimate existing risks, identify ways of reducing
them and calculate residual risk. The figures obtained are not precise but they do place a
useful numerical value on the probability of engineering failure or a major event occurring.
This helps in deciding whether the risk is acceptable or tolerable.
However, engineering factors are not enough and factors such as 'public perception of risk'
must also be accounted for.
Therefore, in conjunction with the engineering and technical considerations involved in QRA,
are the following less objective considerations:
The benefits generated by the project and its associated political and economic
considerations.
The public perception of what can be judged a tolerable or intolerable risk.
The decision as to how far further reduction of risk can reasonably be attempted taking
cost into account.
The final QRA results can be expressed either as risk to the individual or as risk to society.
Both are aspects of the same risk, but are expressed in different ways.
Risk to the Individual
If you work at or live near a hazardous installation, you will want a clear indication of the
actual risk to yourself and your family from a major event occurring at the installation.
Usually risks are given in a comparative sense, e.g. the risk of injury at work or due to a
certain process being compared to the risk of being knocked over on the road. However, the
approach neglects the fact that comparisons are not mutually exclusive; the risk of being
injured at work does not rule out the risk of being knocked over on the road, and therefore the
risks are additive. It may be a useful indicator to know you are ten times more likely to be
injured on the road than at work, but the likelihood of either event occurring has, in fact,
increased.
With respect to estimates of individual fatal risks, an upper limit of one in 1,000 annually is
suggested as representing intolerable risk to the individual. This is about the same as the
occupational risk of death experienced by workers in such high risk groups as mining.
However, members of such groups 'volunteer' to face the risks; therefore it is questionable
whether the 'higher levels' should be applied to individuals who have not 'volunteered'.
A further argument concerns who should arrive at an 'acceptable' figure for risk. Politicians?
Economists? Technical experts? Or those involved with running the risk? As you can see, it is
a highly political question and beyond the scope of this course. What is important is that a
figure for acceptable risk has to be decided in a way agreed by all those involved. QRA offers
one technique which can be utilised in arriving at such a figure, once the political and
economic questions have been answered.
In situations where the benefit to those at risk is indirect, or where no benefit is conferred, the
upper limit of 'intolerability' should be considerably lower than the one in 1,000 figure. It is
argued that the maximum tolerability level for an individual from a large-scale industrial hazard
should be at least ten times lower, at one in 1,000, than the 1 in 10,000 average annual risk of
dying in a road accident. Again, though, this uses comparative analysis and does not stress
the cumulative effect of both risk factors.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Societal Risk
Assessments of societal risk are even more important than assessments of individual risks,
because they involve the likelihood of multi-death disaster. "Societal risk" is so called because
it extends beyond the implications of the immediate circle of those killed to society as a whole.
Societal risk is normally expressed in terms of numbers of people killed, either in tabular form
or as an FN curve where F stands for the frequency, either experienced or predicted, of an
event killing a number, n, of people. Unfortunately, n includes indirect casualties caused as
a result of the main events occurring and can therefore be difficult to predict. For example,
many people may die years after exposure to a toxic chemical.
As a result of the many variables involved in assessing societal risk in different circumstances,
the Discussion Paper concludes that no valid upper criterion for societal risk can be
recommended. The answer is that different situations require different "depths" of analysis.
We need to compare "high frequency, low-consequence events" with "low-frequency, high-
consequence events" (e.g. road accidents with a major hazard disaster). We have substantial
data with which to analyse "high-frequency" events such as road accidents, but insufficient
data to analyse confidently "low-frequency" events such as nuclear plant failures. Therefore
the confidence limits for both types of event vary considerably. As it is difficult to express
uncertainties in fully quantified form, they are often described in qualitative terms, i.e.
"conservative".
Due to all the uncertainties, it is not considered valid to "read across" from one industrial
hazard to another and to rank in this way. Judgment is required to assess each risk on its own
merits.

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BSC International Diploma | Unit 3

Element 3B: Developing the Business Case for Health and


Safety

C O N T E N T S

Study Unit Title Page

3B4 Risk Control

RISK CONTROL STRATEGIES .............................................................................................................................. 3


RISK AVOIDANCE ................................................................................................................................................... 3
RISK REDUCTION ................................................................................................................................................... 4
RISK RETENTION ................................................................................................................................................... 5
RISK TRANSFER (INSURANCE) .................................................................................................................................... 7
RISK SHARING .................................................................................................................................................... 10
DECIDING ON THE OPTIMUM SOLUTION ...................................................................................................................... 10
BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

BSC International Diploma | Unit 3

Element 3B| Developing the Business Case for Health and


Safety

Study Unit 3B4 | Risk Control

Learning Outcome
When you have worked through this Study Unit, you will be able to:

Develop and apply a risk control strategy for an organisation.

Describe the benefits of risk control for an organisation.

Explain the constraints on the control of risks for an organisation.

Unit 4:

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Risk Control Strategies


The topic of risk control can be split into loss control and risk financing which can be
subdivided as follows:
Loss control:
Risk avoidance.
Risk reduction.
Risk financing:
Risk retention.
Risk transfer.
These risk control strategies can be represented by the following diagram, which identifies the
appropriate selection of the techniques based on the likely consequences of given business
risks:

Severity/Consequence

TRANSFER AVOID

RETAIN REDUCE

Likelihood/Frequency

Risk Control Diagram


We will now consider each strategy in detail:

Risk Avoidance
Risk avoidance or risk elimination is the best solution to the problem of risk. In some cases we
will have estimated the risk of some particular operation to involve the possibility of a fatality
or serious personal injury. This suggests that avoidance or elimination is an essential
requirement.
Legislation also sets minimum standards of elimination. However, it might be economically
desirable to permit a loss rather than incur the cost of absolute and total prevention. This is

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

particularly the case where the probability is very low. In most industries there is a particular
pattern of accidents and incidents, referred to as the accident triangle.
The numbers of accidents/incidents used and quoted in various articles and books vary
according to the data collected and the industry. The principle behind them is really what we
have to consider. Why should we expect this pattern?
The difference between one category and the next is only a matter of chance. Every near miss
could have resulted in a more serious accident. Analysis of previous accidents/incidents should
indicate the combination of factors which produced the loss; what made it worse or reduced
the effect; and the part played by human error. Fatalities and serious accidents are rare
events, not because hazardous incidents do not occur, but because workers are careful to
avoid taking large risks and supervisors are careful to control them. There is less care taken
where the risk is regarded as small.
A particular problem is that near misses are not usually recorded. Incidents put down to
human error should be regarded as management error if the true reason is poor design,
unsafe operating procedures, poor selection, poor training, or poor supervision. True human
error may be due to fatigue, stress, illness, outside worries, emotional reactions and past
patterns of work.
Relevant Examples
Redesign of Tasks
Some hazards can be avoided merely by completing a task in a slightly different way. For
example, providing a chair for a supermarket checkout person (rather than requiring them to
stand for extended periods) can remove hazards associated with physical fatigue.
Automation of Process
Some processes are inherently hazardous but the hazards can be easily avoided by automating
the process. One example of this is the use of equipment to transfer materials from one
location to another, e.g. a conveyor belt. This then avoids potential hazards relating to manual
handling.
Use of Specialist Contractors
Sometimes the best way of avoiding a hazard is to make use of specialist contractors, e.g. for
the removal of asbestos. In this way, the hazard is avoided by employees and it ensures that
the task is carried out professionally and in compliance with current legislation. Clearly a
reputable company with suitably trained personnel and a good safety record should be used.

Risk Reduction
In many cases, elimination involves total mechanisation, with high costs and the redundancy of
the existing workforce. These considerations are also part of risk management. Risk
reduction, while not as effective, might be a more economically viable solution.
Technique Prioritisation
In dealing with risk, we must establish an order of treatment. We can use a wood machine
shop as an example and examine the priority of risk reduction options.
1. Total elimination or avoidance of the risk at source, e.g. eliminate the risk of injury from
woodworking machinery by buying materials in ready-sized.
2. Reduction of the risk at source, e.g. reduce the risk of dust exposure by fitting
woodworking machinery with local exhaust ventilation.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

3. Contain the risk by an enclosure of some kind, e.g. where possible fit woodworking
machinery with acoustic enclosures to reduce the risk of noise-induced hearing loss.
4. Remove the employee from the risk, e.g. relocate employees who are not wood
machinists to alternative accommodation away from the wood machine shop.
5. Reduce the employee's exposure to the risk, e.g. limit the time spent operating
woodworking machinery to reduce the operators exposure to wood dust and noise.
6. Use PPE, e.g. provide respiratory protective equipment and hearing protection to reduce
the operators exposure to wood dust and noise.
7. Train the employee in safe techniques, e.g. ensure that all wood machinists are fully
trained and competent.
8. Make safety rules or issue instructions, e.g. provide written safe working procedures for
the operation of woodworking machinery.
9. Tell the employee to be careful, e.g. reinforce safe working procedures by regular
briefings.
The low-numbered stages are often long-term objectives and are the responsibility of
management. However, they are the most effective, but are more costly to implement. The
higher-numbered techniques can be short-term and quickly put into place, but are the least
effective. It may be impossible or prohibitively expensive to eliminate a hazard in a practical
situation. On the other hand, you will get very few marks in the examination if your solution
to a practical situation is to issue a pair of gloves, or just suggest that an employee takes more
care.

Risk Retention
Many organisations spend vast amounts on insurance; it is possible that more is spent on
premiums than is recovered by claims. If you make claims then the premium is raised, or the
insurance company will refuse to insure you. Risk assessments involve determining those
situations where it will pay the company to retain the risk. This means that if a loss occurs
then it has to be paid for. The risk manager has to have adequate funds for this, and must be
able to demonstrate that this is economically better than insuring. It can be a problem for any
organisation to have fluid finances for risk retention purposes.
Sources of Funds
Possible sources are:
Pay losses from current operating funds. Payments should be restricted to a maximum of
about 5% of the operating costs. Losses must be predictable.
Use an unfunded reserve, such as depreciation. This is where some large item of capital
expenditure is written off over a number of years. The problem is that the fund does not
actually exist except as an accounting convenience. There is no tax advantage and no
actual ready cash.
Use a funded reserve, e.g. a fund of cash or easily obtained cash. It could be a group
fund. There is no tax advantage. It takes time to build up such a reserve, so care is
required in the early years. There is low interest on capital. If you wish to obtain a good
rate of interest, you will have to give notice before you can withdraw funds. The fund
needs to gain interest, but should be readily available when required.
Insuring through a captive insurer, as discussed later.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Borrowing to restore losses, which is not easy after a loss occurs. For example, if you had
just had a large fire at the factory, the local bank manager would not be too eager to lend
and would make a lot of expensive conditions.
Uncalled capital, which involves part-paid shares. A number of rights issues have allowed
payments by instalments. It is possible to leave a final payment uncollected as a
precaution against a future need (to finance some market opportunity or an unexpected
loss). The problem is that when the loss occurs, it takes time to collect the payments.
The company's share value falls and the company could have greater problems.
Divert funds from planned capital investment; here the company has to use funds set
aside to buy some important capital item, because there is a loss which has to be paid for.
If you consider each of these sources in turn, you should come to the conclusion that if a
company needs funds to pay for any loss, then there is no readily available, inexpensive source
of finance. On the other hand, there are some good reasons for considering risk retention.
Advantages of Risk Retention
The full sum of insurance premiums is never paid out, so risk retention can be cheaper
than insurance. The insurance company is not a benevolent society and has to make a
profit both for future finance and for its shareholders. You will probably remember that
Windsor Castle was not insured against fire. The premium would have been too high and
there were other ways of recovering fire losses. A millionaire does not insure his car
comprehensively. If it becomes damaged, he just buys another one. The good car driver
or employer pays, through his premiums, for the poor driver or employer. Insurance is
profitable for poor risk managers, but not for a good risk manager.
Retention reduces the cost both of processing claims and the detailed accounting
required. The loss occurs and you just pay out.
If costs are allocated to departments, the management becomes more risk conscious.
This is a vital feature in risk management; it is pointless for a departmental manager to go
all-out for production profit and then have to use his profits to pay for accidents and
losses. The profit and loss situation will be a paper exercise, but it does represent the
true situation. Promotion has to depend on other factors besides production.
Losses are dealt with quickly.
You should think about each advantage and see whether it applies to your organisation.
Deliberate and Accidental Risk Retention
Every risk which is not transferred (to insurance) is a retained risk. Examples are:
Events which are insurable. It is impractical to get insurance for everything. The
insurance company has to be able to assess risk, since they are in the business of risk
management. They may quote a premium which is above the value you wish to insure.
If you can buy a new item for the price of the premium, it is pointless to insure. Take the
risk instead.
Losses not considered when setting up insurance if you do not contemplate a particular
possibility, you are retaining the loss. It is a case of accidental risk retention, or risk
retention by default.
Hazards deliberately not insured you have to insure a car for third party risks, but the
choice to insure comprehensively is left to you. Risk management is all about taking a

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

risk, where you have been able to reduce either the probability or the severity of a loss-
making event.
Losses not within the scope of the insurance there are always exclusion clauses, the
significance of which may not be realised until a claim is made. The good risk manager
does not find himself in such a situation.
The part of the loss paid by the company (the excess) you can get cheaper insurance if
you agree to pay the first costs of any claim.
The part of the loss which is above the limits of the contract. There is often an upper limit
to an insurance claim. The claimant pays if the loss exceeds that figure.
The person or company is unable to pay full compensation. Obtaining the cheapest
insurance cover may not be sound economy if your losses put them into bankruptcy.

Risk Transfer (Insurance)


Transfer involves financing the loss from funds which originate outside the organisation.
Insurance is the obvious method, but we must consider other ways too. Some alternatives to
choose from are:
Insurance from an unaffiliated insurer the insurer has no association with your company.
Insurance from an affiliated (or captive) insurer or trade association the insurer is within
your trading group. Profits and losses stay within the organisation.
A contract with a non-insurer you set up a contract with someone, who will be
responsible for any losses.
Insurance from an Unaffiliated Insurer
It is fairly easy to insure direct losses, e.g. property, fires, contract penalties, compensation,
legal costs. It is much more difficult to insure or even prove indirect losses.
As an illustration of the general situation, consider the following figure:

INSURED
Employers' liability Business interruption
Public liability Product liability I
D
N
I Damage to buildings
D
R Damage to vehicles I
E
R
C Sick pay Investigation costs E
T Repairs Loss of goodwill C
Product lost/damaged Loss of corporate image T
Hiring and training of
replacement staff
UNINSURED
You should recall that the different types of risk that we can identify are:
Pure risk, which offers no prospect of gain, only a loss or no change. It is usually
insurable.
Speculative risk, where there is a possibility of a gain or a loss. These are trading and
business risks. Generally they may not be insured.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Fundamental risk, which tends to affect large sections of the public and has some
element of catastrophe. Such risks are generally regarded as commercially uninsurable.
Particular risk, the consequences of which are comparatively restricted. Most insurable
risks are particular risks.
For insurance purposes, risks must be pure risk (only loss, not a gain or loss) and particular
risk (quantifiable and restricted). There are a number of other conditions which must be
satisfied:
The person insuring must have an interest in what is insured. You can insure yourself, or
a very close relative. A factory can be insured only by someone representing the owner.
Insurance is limited to the financial value. You probably know that if you over-insure your
car and have a loss, the insurer only pays out what it is worth at the time (and will argue
about that). If you under-insure your house contents by 50%, you will only get 50% of
the loss repaid. You can't win!
It must be possible to calculate the risk. Remember that risk measurement is probability
maximum possible loss. The insurance company will have to calculate it. The risk
manager is just as good at performing the calculation.
The risk must be unexpected, accidental and legal.
War risks and earthquakes are not usually included.
Insurance premiums are usually set higher than the total claims even though, as we saw
earlier, the full sum of insurance premiums is never paid out. If the insurance company
knows what the claims have been, they will charge in excess of this for next year's
premium.
A question is often asked about how to reduce insurance premiums. One way is to retain
losses. Another way is to accept a voluntary excess on insurance premiums and control losses.
Advantages of insurance are that:
The loss will be dealt with smoothly. There will be a few forms to fill in and enquiries, but
the procedures are well known.
The cash is available. The insurer can get hold of the funds quickly, though will perhaps
not release them as quickly as you would like.
The insurer can provide advice. He is dealing with this type of problem all the time and
can help you to decide what is best.
The insurer can deal directly with a third party. Consider the case of a fatality or a third
party loss, where a compensation claim has to be decided. The company will leave it to
the legal experts of the insurer and can be seen to be considerate, even if they are more
interested in keeping losses small.
There are tax benefits to the company. The company does not pay tax on insurance
premiums.
Captive or Affiliated Insurer
This is an insurance company established to deal with the risks of the company and its
associates. The original reasons for establishing such insurance companies were:
Difficulty in insuring hazardous operations some industries were regarded as hazardous
and so could not get insurance. They tended to form trade associations, paid

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

contributions and made claims for losses. The Lloyd's of London shipping register is an
example.
A company normally financed its own risks and then legislation required compulsory
insurance (employers liability).
To improve public relations a firm might want a third party to be between itself and the
public without the cost of the insurance premium.
Having a captive insurance company seems to give the company the best of both worlds. Risk
management involves dealing with insurance aspects and the most cost-effective way of doing
so is by this route. There are some disadvantages, however:
The firm has to be large to make it worthwhile.
It must be able to set up an office in a tax haven. Every company in the UK has to pay
UK taxes; so if the insurance section makes a profit, it pays tax. A typical tax haven
would be in the Caribbean. Only an office, a telephone and an official are required. The
Channel Isles, Isle of Man and Switzerland have some tax benefits.
It must have access to the reinsurance market to spread the risk. Small insurance
companies 'lay off' risks by taking out insurance, as practised within the Lloyd's market.
Mistakes can prove expensive.
In addition to the above historical reasons for the existence of captive insurers, there are a few
more recent trends:
Control of funds by the group rather than the insurer.
Information transfer on accidents and losses is quicker and helps risk management.
There are tax savings. There may be income tax savings on premiums and no corporation
tax paid on investments.
It may be possible to offer insurance to smaller companies.
Contract with a Non-Insurer
This involves placing a particularly risky operation with an outside organisation. It will involve
the use of a contractor or a self-employed person. It transfers the risk, but there are some
problems:
There could be loss of control of a process which is vital to your organisation.
It may be difficult to get a contract signed. The contractor may be aware of your reasons
for wanting the work transferred from your staff.
The contract must be fair and reasonable. If you are less than honest, you will still have
to pay for the losses.
If there is a loss, the contractor may not have adequate funds or insurance, so you still
pay out.
If a contractor insures against loss, your organisation pays the premium in with the
contract price. However, the contractor may not adequately insure, and if so, you still lose
out.
This type of contract can, however, be useful to cover:
Damage to property - include this clause in the contract to protect yourself.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Personal injury - make the contractor responsible for his employees' safety when working
on your site. However, make very sure his standards are as good as yours.
Liability for nuisance, smoke, noise, smell, etc.
Replacement of defective goods if someone is making a part for you (even if it involves
a hazard which you do not want on your site), you can expect it to be up to standard.
Losses when inferior or unsuitable goods are supplied, which may fall in the area of
product liability.
Risk Sharing
Risk Sharing involves financing risks which are manageable and transferring those which are
not.
Methods include:
A deductible portion of excess - you pay the first part of each claim.
Reinsurance the insurance company spreads the risk by itself taking out insurance, e.g.
at Lloyds.
Co-insurance - the insurer pays a percentage of the claim. It is another way of reducing a
premium. You share the risk with the insurer by paying not only an excess but a
percentage of the losses which fall within a certain price range; paying another
percentage of those in another range, and the insurer paying all losses above a set figure.
An Important Point
A good risk manager will make his greatest savings in the area of insurance. He will not insure
where he has eliminated a risk. He will consider very carefully those areas where he has
significantly reduced the risk. He will pay for the retained risks where it is cheaper than
insuring. However, if he asks for insurance for just some risk, the insurer is going to be wary.
He is only using insurance as a last resort, so there must be a problem he cannot solve.

Deciding on the Optimum Solution


The selection of the optimum solution must take into account the type of organisation and the
relevant risk data. The risk assessment will be a vital part of the exercise. If the probability is
high and the severity is also high, then it will be vital to do a great deal and spend a lot of
finance to achieve a valid solution. If the probability or the severity is low, then it will not
warrant too great an expenditure.

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BSC International Diploma | Unit 3

Element 3B: Developing the Business Case for Health and


Safety

C O N T E N T S

Study Unit Title Page

3B5 Techniques for Identifying Risks to a


Business

FAULT TREE ANALYSIS (FTA).............................................................................................................................. 3


TOP DOWN APPROACH .......................................................................................................................................... 3
FAULT TREE ANALYSIS FOR CALCULATING THE PROBABILITY OF AN EVENT .............................................................................. 6
EVENT TREE ANALYSIS (ETA) ............................................................................................................................. 7
BOTTOM UP APPROACH ......................................................................................................................................... 7
FAILURE MODES AND EFFECTS ANALYSIS (FMEA) ............................................................................................. 9
HAZARD AND OPERABILITY STUDIES (HAZOP) ............................................................................................... 13
THE HAZOP CONCEPT .......................................................................................................................................... 13
BASIC PRINCIPLES ................................................................................................................................................ 14
MAIN STUDY ...................................................................................................................................................... 16
P.E.S.T.L.E ANALYSIS ........................................................................................................................................ 22
BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

BSC International Diploma | Unit 3

Element 3B| Developing the Business Case for Health and


Safety

Study Unit 3B5 | Techniques for Identifying Risks to a


Business

Learning Outcome
When you have worked through this Study Unit, you will be able to:

Apply techniques for identifying risks to a business.

Unit 5:

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Fault Tree Analysis (FTA)


Top Down Approach
In many cases, there are multiple causes for an accident or other loss-making event. Fault
tree analysis is one analytical technique for tracing the events which could contribute. It can
be used in accident investigation and in a detailed hazard assessment.
The fault tree is a logic diagram based on the principle of multi-causality, which traces all
branches of events which could contribute to an accident or failure. It uses sets of symbols
which are similar to those used in logic diagrams to represent electronic circuits (see the figure
called "Diagram Symbols"). The AND gate indicates that, in order for the event to occur, there
must be more than one condition present at the same time. The OR gate indicates that in this
situation there are a number of ways in which the condition can occur. In order to prevent the
loss taking place, we would first examine the diagram for AND gates. The loss can be
prevented if just one of the conditions is prevented.
The fault tree starts with a 'top event', such as a particular accident or other undesirable event
(see the figure called "Simplified Fault Tree"), and is developed from the top downwards to
obtain all the possible primary cause events. Although there are many symbols available for
use in drawing fault trees, only four or five are essential.

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Fault tree logic and event symbols

Logic symbols Name and meaning of symbols

AND gate
Output exists only if
all inputs exist

OR gate
Output exists if
any one input exists

Output fault INHIBIT gate


Output equals input if
Condition condition input satisfied
input

Input fault

DELAY gate
Delayed output
fault
Output exists after delay
time has elapsed

Event symbols

RECTANGLE
Fault event usually
resulting from more basic
fault events
CIRCLE
Primary failure

DIAMOND
Fault event not
developed to its cause

CIRCLE WITHIN DIAMOND


Fault event developed in
another fault tree and here
inserted as if it were a
primary
DIAMOND WITHIN DIAMOND
Fault event requiring to be
developed further in order to
complete the tree
HOUSE
Event normally expected to
occur
IN
TRIANGLE
Transfer in

OUT Transfer out

Diagram Symbols

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Explosion in
paint spraying
booth

Flammable paint Source of


spray in ignition
explosive present
concentration

Paint
continues
to flow

Flames
present Electrical
Lit
near booth spark
Extractor fan cigarette
present in or
fails to
operate near booth

Failure of
earthing
system

Electricity Lit
supply cigarette
Mechanical fails
failure of Lit introduced
extractor fan cigarette by
introduced another person
by
operative

Electricity
company
fails to
Failure of supply
internal electricity
electrical
circuits

Strike Breakdown of
of power electricity
workers generation
called

Simplified Fault Tree for the Top Event: "Explosion in Paint Spraying Booth"

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

The above diagram shows an example of a fault tree for a loss-making event. Note that each
route is developed until it ends at a primary event, or to a point where we consider that we
have reached an equivalent situation. You should be able to make some possible
improvements to this fault tree. The author seems to think that smoking is a major cause of
ignition. There are probably many more examples of ignition causes that have not been
considered.

Fault Tree Analysis for Calculating the Probability of an Event

Fire (0.0735)

AND

Fuel (0.21) Oxygen (1) Ignition (0.35)

OR OR

P = 0.1 P = 0.02 P = 0.09 P=1 P = 0.2 P = 0.05 P = 0.1

Fault Tree Analysis for a Fire


The above figure shows a simple fault tree for a fire. For a fire to occur there needs to be:
Fuel.
Oxygen.
An ignition source.
From previous experience, or as estimation, a probability for each of these events can be
established. The example shows three possible sources of fuel and three possible sources of
ignition. An OR situation applies in each case, because it would only need one of these to
occur. The total probability for each event can be found by adding the probabilities in each
case. Where there is more than one way that an event can occur, the probability is increased.
The probability of oxygen being present will usually be 1, since it is normally present in the
atmosphere. An AND situation applies where the three conditions are combined to produce
the fire. In this case the probabilities are multiplied. Where a number of conditions must all
occur at the same time, the probability is reduced. A multiplication by a fraction (less than 1)
reduces the product.

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Event Tree Analysis (ETA)


Bottom Up Approach
This is a similar technique but starts with a primary event such as a power failure and works
from the bottom up. It defines the events which flow from the primary event. Event trees are
used to investigate the consequences of loss-making events in order to find ways of reducing,
rather than preventing, losses. They are often shown using a different set of symbols but
there is no very good reason for doing so.
Stages in carrying out event tree analysis:
1. Identify the primary event of concern.
2. Identify the controls that are assigned to deal with the primary event such as automatic
safety systems, alarms on operator actions.
3. Construct the event tree beginning with the initiating event and proceeding through
failures of the safety functions.
4. Establish the resulting accident sequences.
5. Identify the critical failures that need to be addressed.
The following diagram shows an event tree for the action following a fire on a conveyor
system. This could be used to check that there were adequate fire detection, warning and
extinguishing systems. In the event of a fire, it would be possible to determine how adequate
these precautions had proved to be.

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Fire on conveyor

t = 10

Heat sensor detects


Yes No

Valve operates
Yes No

Water supply available


Yes No

Sprays operate
Yes No

Fire out Fire out of control

Detected Treated
by other means by other means
Event Tree Diagram

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Failure Modes and Effects Analysis (FMEA)


FMEA is an analytical hazard identification technique. It is usually completed by filling in a
form. There are many different variations of the FMEA principle. The technique is best
employed at the design and development stages of a new process (such as a chemical process
plant), but could also be used to systematically examine a process already in operation or to
investigate an accident. It can be used for a wide range of engineering situations and is
essentially a simple form of HAZOP (see the next section).
The purpose of the analysis is to identify the causes of failure of individual components of a
system and explore the effects of these failures/malfunctions on the system as a whole.
Basically, we ask and answer the question: "If this part fails in this manner, what will be the
result?" The methodology is as follows:
Break the system down into its component parts.
Identify how each component part could fail.
Identify all possible causes of that failure.
Identify the effects and extent of the failure on the system as a whole.
Assess the likelihood of failure.
Identify the means of detection of failure (alarms/sensors, etc.).
Allocate a risk priority code (based on severity and probability) or a risk priority number
(based on severity, probability and detection).
Decide on controls needed to reduce the risk to an acceptable level.
To be useful, the analysis must be more than just filling in a form. Though not necessary for
simple cases, for any complex system it is vital to have a team approach, with members
chosen for expertise in their particular fields.
A simplified variation of FMEA is a checklist of fault conditions associated with each
component.
FMEA can be extended to include a numerical probability for each failure mode and a severity
to measure the consequence of any failure, thus ranking the hazards in order of priority.
Part / Process Failure Effect of P S D RPN Action Required
Mode Failure

FMEA Form
RPN = Risk Priority Number (RPN) and this is obtained by multiplying numbers given for
probability (P), severity (S) and detection (D). Therefore:
RPN = P S D
where P, S and D are obtained from the following table of ratings:

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Severity Rating (S)


Minor 1
Low 2-3
Moderate 4-6
High 7-8
Very high 9
Catastrophic 10
Probability Rating (P)
Remote 1
Low 2
Moderate 3-6
High 7-8
Very high 9-10
Detection Rating (D)
Remote probability of being missed 1
Low probability of being missed 2-3
Moderate probability of being missed 4-6
High probability of being missed 7-8
Very high probability of being missed 9-10
The possible range is therefore between 1 and 1,000 and priority for action should be assigned
accordingly. It is worth noting that every possible failure mode has to be awarded an RPN and
therefore where a component or part can fail in more than one way, an FMEA has to be carried
out on all possible failure modes. An American spacecraft was lost at the cost of many billions
of dollars due to an FMEA being carried out on the possibility of short-circuits taking place
amongst the electronic circuits, but not on the outcome of open circuits amongst the same
circuits and components.
Example
A simple lifting mechanism consists of a hydraulic ram, operated by a three-position controller
and a switch which starts up the hydraulic pump. We can complete a simple FMEA for this
situation.
The following figure shows the basic parts. I have used some standard symbols, and some
block representations. The FMEA form is as above. The three positions of the controller are
up, down, and lock in position. There are two safety valve systems to allow the pump to run
when hydraulic fluid is not being used. One is a bypass device which moves to a fully open
position; the back-up system uses a spring-loaded valve. The second is a more reliable
method, but the pressure heats up the fluid.

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Simple Lifting Mechanism

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Part/Process Failure Mode Effect of P S D RPN Action Required


Failure

Switch Stuck off No power Replace


Stuck on Danger Emergency switch

Motor Open circuit No power Replace


Short-circuit Shock Earth trip

Pump Mechanical Repair/replace

Pipelines Leak Fluid loss


Danger to men Detect and stop
Blockage Danger of burst

Bypass valve Does not open Pressure to No problem


relief valve
Sticks open No fluid to ram Operational problem

Relief valve Does not open No pressure Automatic power cut-off


relief

Controller Stuck on Operational Repair/replace


Stuck off problems

Leaking Danger Safety precaution

Ram Jammed Operational


problem
Leaking Danger Stop use

FMEA Form

As a classroom exercise, we have left the FMEA form with the Probability (P), Severity (S) and
Detection Rating (D) columns blank. Using the information provided, discuss what the ratings
might be.

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Hazard and Operability Studies (HAZOP)


The HAZOP Concept
HAZOP stands for Hazard and Operability Studies, and is a set of formal hazard identification
and elimination procedures designed to identify hazards to people, process, plant and the
environment. It aims to stimulate the imagination of designers and operations people in a
systematic way, so they can identify potential hazards. In effect, HAZOP studies assume that
there will be mistakes, and provide a systematic search for those mistakes.
The HAZOP technique can be used to identify human error potential, which can occur at all
levels of a management structure as well as in the operation of a plant or process.
Some investigations have shown that a HAZOP study will result in recommendations that are
40% safety-related and 60% operability-related. Therefore, HAZOP is far more than a safety
tool; a good study can also result in improved operability of the process or plant, which may
mean increased profitability.
HAZOP can be an important part of establishing the operating discipline of a plant, i.e. the
total information required to understand and operate the facility. By recording
recommendations and actions on all parts of the process in detail, the rationale behind the way
the process is designed and intended to operate, and key details of the process will be
available, which are rarely on record from other sources. This can be very helpful when
changes to plant are made or when new plants are built to the same design.
HAZOP is a formal procedure that offers great potential to improve the safety, reliability and
operability of process plants by identifying and eliminating potential problems at the design
stage, but it is not limited to the design stage. It can be applied anywhere where a design
intention (how the part or process is expected to operate) can be defined, such as:
Operating procedures.
Maintenance procedures.
Mechanical equipment design.
Design/operation of batch or continuous processes.
Critical instrument systems.
Development of process control computer code.
HAZOP studies involve a team, at least some of whom must have experience in the plant
design to be studied. Overall aims of any HAZOP study include:
Identify as many deviations as possible from the way the design is expected to work, their
causes, and problems associated with these deviations.
Decide whether action is required, and identify how problems can be solved.
Identify cases in which a decision cannot be made and decide what information or action
is required.
Ensure that required actions are followed through.
At every point in the operation, the process designer should conceive of the worst possible
combination of circumstances that could exist. An engineering evaluation should be made of
the worst-case consequences, with the goal that the plant will be safe even if the worst case
occurs. A HAZOP study can be used to help accomplish worst-case thinking. When the worst-

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

case conditions are known, realistic and reasonable actions can then be taken to correct the
situation where feasible.
The HAZOP method is designed for dealing with complicated systems, such as large chemical
plants or a nuclear power station, where a small error or fault can have drastic consequences.
There are principles which can be used in simpler situations, but a full HAZOP will not usually
be cost-effective except in a very high risk situation. We will cover the principles only. More
detailed descriptions can be found in HAZOP and HAZAN, Trevor Kletz, 1986, Institution of
Chemical Engineers.

Basic Principles
The studies are carried out by a multidisciplinary team, who make a critical examination of a
process to discover any potential hazards and operability problems. It is a checklist approach
similar to that used in method study. The study may involve:
A word model.
A process flow sheet.
A plant layout.
A flow diagram.
It is particularly useful in the chemical industry, but can also be applied in other circumstances.
Studies can be made at different stages of a project, with different teams and in various
degrees of detail.
The process is first fully described and then every part is questioned to discover all possible
deviations from the intended design which might occur, and what their causes and
consequences might be.
The main features are:
Intention.
Deviation.
Causes.
Consequences.
Hazards.
Operating problems.
The required intention is stated simply.
A number of 'guide words' are applied to the statement of intention, so that every possible
deviation from the required intention is considered. The main guide words are:

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

NO or NOT Negation of intention


MORE Quantitative increase
LESS Quantitative decrease
AS WELL AS Qualitative increase
PART OF Qualitative decrease
REVERSE Logical opposite of intention
OTHER THAN Complete substitution

The guide words can be applied to:


Process conditions.
Activities.
Substances.
Time.
Place.
All the words may not apply in every case, so others are substituted, for example:
REVERSE does not apply to a 'substance'.
SOONER or LATER is better than OTHER THAN for 'time'.
HIGHER or LOWER may be better than MORE or LESS.
WHERE ELSE may be better than OTHER THAN.
An example may be given of a situation where two pumps are used to produce two flows A
and B into a reactor to produce product C. Flow B must be less than flow A or an explosion
will occur.
The intention is TRANSFER A (into the reactor at the correct design flow).
Possible deviations are:
NO or NOT No flow of A.
MORE Flow of A greater than design flow.
LESS Flow of A less than design flow.
AS WELL AS Transfer of something in addition to A. Occurrence of
some other operation in addition to TRANSFER.
PART OF Failure to transfer all components of A. Failure to achieve
all that is implied by TRANSFER.
REVERSE Flow of A in a direction opposite to the design direction.
OTHER THAN Transfer of some material other than A. Occurrence of
some operation or event other than TRANSFER.
The process is repeated using this or some similar algorithm (see the diagram entitled Hazard
and Operability Studies: Detailed Sequence of Examination").

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

It is better to identify any possible major hazards at an early stage. The plant layout diagram
is often utilised and raw materials, intermediate products, effluents, unit operations and layout
are checked against a checklist of potential hazards:
Checklist for Major Hazards
1. Fire 7. Noise
2. Explosion 8. Vibration
3. Detonation 9. Noxious material
4. Toxicity 10. Electrocution
5. Corrosion 11. Asphyxia
6. Radiation 12. Mechanical failure

Main Study
This is the essential part of the Hazard and Operability Study. There are slight differences
between the method for a continuous process and a batch process.
For a continuous process, the working document is normally the flow diagram. Each pipe is
examined in turn, checking flow, pressure, temperature and concentration, using a checklist of
guide words. The study should also consider the situation during commissioning, start-up and
shut-down.
For a batch process, the flow diagram and the operating procedures would be vital documents.
Some examples showing a batch process follow.

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Beginning

1 Select a vessel

2 Explain the general intention of the vessel and its lines

3 Select a line

4 Explain the intention of the line

5 Apply the first guide words

6 Develop a meaningful deviation

7 Examine possible causes

8 Examine consequences

9 Detect hazards

10 Make suitable record

11 Repeat 6-10 for all meaningful deviations derived from first guide words

12 Repeat
Select a5-11
vessel
for all the guide words

13 Mark line as having been examined

14 Repeat 3-13 for each line

15 Select an auxiliary (e.g. heating system)

16 Explain the intention of the auxiliary

17 Repeat 5-12 for auxiliary

18 Mark auxiliary as having been examined

19
Repeat 15-18 for all auxiliaries

20 Explain intention of the vessel

21 Repeat 5-12

22 Mark vessel as completed

23 Repeat 1-22 for all vessels on flow sheet

24 Mark flow sheet as completed

25 Repeat 1-24 for all flow sheets

End
Hazard and Operability Studies: Detailed Sequence of Examination
(Chemical Industry Safety and Health Council, 1977)

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Vent
Flame trap Alkali
supply
CW
General purpose out
measure Air

Condenser
vessel

Alkali
P1 measure
vessel
L1 Air
ejector CW
in

Drum
Drain
Orifice plate
Absorption
tower

To
Vessel 1

vent

Vessel 4
Vessel 3
Vessel 2

Tank

To vacuum Nutsche filter


Filtrate
receiver
To effluent
disposal

Example of a Batch Process

Deviations Causes Consequences

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

DON'T REMOVE AIR No air supply Process inconveniences but no


Faulty ejector hazard
Valve shut
REMOVE MORE AIR Completely evacuate measure Can vessel stand full vacuum?
vessel
REMOVE LESS AIR Insufficient suck to transfer Process inconvenience but no
contents of drum hazard

AS WELL AS REMOVE AIR Pull driplets of material C or other Fire hazard?


materials from drums or vessels 1 Static hazard?
or 4 along exhaust line Corrosion hazard?
Blocked flame trap?
Will material be a hazard after
leaving the flame trap? Where
does it go?

REMOVE PART OF AIR Remove oxygen or nitrogen only:


not possible
REVERSE REMOVAL OF If line from air ejector is blocked Overpressure vessel?
AIR compressed air will flow into Blow air into drums and spray
measure vessel out contents?
Put air into vessels 1 or 4?
OTHER THAN REMOVE Put air ejector on when measure Spray contents along line and
AIR vessel full out through flame trap. Similar
hazards to AS WELL AS

Hazard and Operability Studies: Results for Batch Plant for Operation 'Remove some
Air from Measure Vessel'
(Chemical Industry Safety and Health Council, 1977)

HAZOP Example
In the continuous process shown in the following figure, phosphoric acid and ammonia are
mixed, and a non-hazardous product, diammonium phosphate (DAP), results if the reaction of
ammonia is complete. However:
If too little phosphoric acid is added, the reaction is incomplete, and ammonia is
produced.
If too little ammonia is added, the reaction results in a safe but undesirable product.

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

Continuous Process
The team leader works through each study node and applies the guide words to the process
parameters. Thus, for study node 1:

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

GUIDE INTENTION DEVIATION CAUSE CONSEQUENCE ACTION


WORD
NO Specified No flow at Valve A fails Excess ammonia in Automatic
phosphoric acid study node 1 closed reactor and release closure of
flow to reactor to work area valve B on loss
Supply exhausted
vessel of phosphoric
Pipe blocked acid supply
Pipe ruptured
LESS Specified Reduced flow at Valve A fails Excess ammonia in Automatic
phosphoric acid study node 1 partially closed reactor and release closure of
flow to reactor to work area valve B on loss
Pipe partially
vessel of phosphoric
blocked
acid supply
Pipe leak
MORE Specified Increased flow Valve A fails open Excess phosphoric None
phosphoric acid at study node 1 acid degrades
flow to reactor product but
vessel presents no hazard
to workplace
REVERSE Flow of Reverse flow at No foreseeable
phosphoric acid study node 1 mechanism for
to reactor vessel reverse flow
OTHER Flow of Material other Wrong delivery to Depends on Procedural
THAN phosphoric acid than phosphoric phosphoric acid tank properties of check on batch
to reactor vessel acid in line A substituted before filling
material tank

This process then continues by choosing other process parameters and combining them with
the guide words.

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

P.E.S.T.L.E Analysis

A PESTLE analysis is a review of all of the external factors that impact on our own business
environment.
The analysis examines the impact of each of the following 6 factors (and their interplay with
each other) on the business:
P Political (T h e c u r r e n t a n d
p o t e n t i a l i n f l u e n c e s f r o m
p o l i t i c a l p r e s s u r e s )

E Economic (T h e l o c a l , n a t i o n a l
a n d w o r l d e c o n o m y i m p a c t )

S Social (T h e w a y s i n w h i c h
c h a n g e s i n s o c i e t y a f f e c t
t h e o r g a n i s a t i o n )

T Technological (T h e e f f e c t o f n e w a n d
e m e r g i n g t e c h n o l o g y )

L Legal (T h e e f f e c t o f n a t i o n a l
a n d w o r l d l e g i s l a t i o n )

E Environmental (T h e l o c a l , n a t i o n a l
a n d w o r l d e n v i r o n m e n t a l
i s s u e s )

You may also come across other names for this or similar techniques: e.g. PEST, STEP, STEEP
The results of the survey can then be used to take advantage of opportunities and to make
contingency plans for threats when preparing business and strategic plans.
You need to consider each PESTLE factor as they all play a part in determining your overall
business environment. Thus, when looking at political factors you should consider the impact
of any political or legislative changes that could affect your business. If you are operating in
more than one country then you will need to look at each country in turn.
The PESTLE analysis can be used to provide a context for the organisations role in relation to
the external environment. The factors can be at macro (e.g. World-, EU- or UK-wide) or micro
(e.g. institutional or individual) level. Depending on the scope and scale of the exercise being
undertaken, you may want to consider for each factor:

Which of the factors are of most importance now?


Which are likely to be most important in a few years?
What are the factors influencing any changes?

It is also common to input the findings of A PESTLE analysis into other analytical tools such as
SWOT analysis (see problem solving chapter) in order to help arrive at decisions, which will

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BSC s International Diploma - Element 3B | Developing the Business Case for Health and Safety

then form part of an overall strategic business plan. They can also be used as a basis for future
planning and strategic management.

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BSC International Diploma | Unit 3

Element 3B: Developing the Business Case for Health and


Safety

C O N T E N T S

Study Unit Title Page

3B6 Problem Solving Techniques

FINDING BUSINESS SOLUTIONS TO HEALTH AND SAFETY CHALLENGES .......................................................... 3


SWOT ANALYSIS ................................................................................................................................................... 3
THOUGHT SHOWERS ............................................................................................................................................... 6
MIND MAPPING ..................................................................................................................................................... 7
GAP ANALYSIS ...................................................................................................................................................... 9
CAUSE AND EFFECT DIAGRAMS (FISHBONE DIAGRAMS) .................................................................................................... 13
FLOWCHARTING................................................................................................................................................... 15
BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

BSC International Diploma | Unit 3

Element 3B | Developing the Business Case for Health and


Safety

Study Unit 3B6 | Problem Solving Techniques

Learning Outcomes
When you have worked through this Study Unit, you will be able to:

Apply problem-solving techniques to health and safety challenges.

Unit 6:

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Finding Business Solutions to Health and Safety


Challenges
Although there will always be health and safety challenges and problems within the workplace,
it is crucial to remember that there are a wide variety of solutions to help meet and solve
them.
One of these solutions could be SWOT analysis which highlights the strengths, weaknesses,
opportunities and threats of a health and safety challenge. Others include thought showers,
mind mapping and gap analysis. It is useful to use a range of problem solving techniques to
help tackle health and safety challenges. The following section will provide you with an
overview of some common solving techniques.

SWOT Analysis
A SWOT analysis is a simple technique which looks at an organisation's strengths and
weaknesses, opportunities and threats. It is usually shown in diagram form (see the figure
below).

Strengths Weaknesses

Threats Opportunities

SWOT Analysis
It could be applied, for example, to the health and safety set-up of an organisation, where the
strengths might be good risk assessments, a weakness could be lack of auditing, opportunities
might be to review the health and safety set-up on a regular basis, and threats could be
possible improvement and prohibition notices.
Strengths and Weaknesses
The strengths and weaknesses part of the appraisal is essentially an internal appraisal, which
identifies those areas of the health and safety set-up having strengths that should be exploited
by suitable strategies, and which areas have weaknesses which should be minimised. It
considers information on areas such as the following:
Health and safety culture and climate.
Communication and consultation.
Employee behaviour.
Training.
Health and safety management systems.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Risk control.
Plant and equipment/facilities.
Where any factor suggests a significant strength or weakness, further investigation may be
warranted and strategies devised to develop or minimise the situation.
Strengths can be in terms of:
High quality risk assessments.
Management commitment.
Good reputation for health and safety.
Highly trained workforce.
Latest technology.
Sound financial footing.
Always remember that today's strengths can be tomorrow's weaknesses. Imagine a
leading manufacturer being so confident of their product that they relax in their efforts to keep
pace with technology the competition won't be far away!
Weaknesses could be the opposite of the above or, perhaps, might be:
Lack of auditing.
Poor health and safety culture.
High level of accidents.
Poor internal communications.
Lack of targets for health and safety.
Poor monitoring.
If it was shown, for example, that the health and safety culture was poor, strategies could be
developed to make it more positive.
Opportunities and Threats
The opportunities and threats part of the appraisal is more outward looking and seeks to
identify the organisation's relationship with the rest of the world.
Opportunities can be identified and exploited by the organisation's strengths. Typically, to
review opportunities, the organisation must identify what opportunities exist, what their
potential is and whether or not the organisation has strengths to maximise the potential of the
opportunity.
Opportunities might be:
Profitable contract work opening up.
A change in technology which can make work safer.
A specific activity which is about to happen that will present opportunities for the
company, e.g. a new housing development will present opportunities for a number of
contractors in the local area.
Investment in new equipment.
Diversification into work with fewer hazards.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Skilled staff becoming available through redundancy elsewhere.


Threats from the business environment, in the form of economic conditions, government
action, technological advances, and competitor activity are also anticipated and strategies
developed to minimise the impact.
Threats may be:
Better health and safety record of competitors.
Litigation by injured employees.
Changes in regulations or legislation.
Poor quality raw materials.
Resistance to change.
Enforcement action by inspectors.
Example
Company X has a poor health and safety culture, with an unacceptably high level of accidents.
These are their weaknesses and, more alarmingly, their threats too. However, they have an
opportunity to turn their weaknesses and threats into strengths by installing a positive health
and safety culture, monitoring accidents (both reactively and proactively), training workers in
the importance of working safely, installing safe working methods, etc.
Using SWOT Results
The outcome of the SWOT analysis will help define objectives and strategies aimed at:
Building on strengths.
Overcoming weaknesses.
Capitalising on opportunities.
Averting/preparing for threats.
Plans can thus be tailored to fit the current, or changing, circumstances and should therefore
be much more effective.
The aim of the SWOT process is to enable you to convert weaknesses into strengths and
threats into opportunities, by taking remedial action to improve existing situations and plan a
programme of on-going, continuous change. Where an organisation is weak in respect of a
skilled workforce, for example, then it is essential that training is identified as a key objective
and that this is underpinned by financial investment and resources.
When undertaking a SWOT analysis, you should also be aware of the differences between
controllable and uncontrollable. Essentially the controllable areas are those relating to internal
issues. By and large your organisation does have control on 'micro' issues relating to
technology, skills, investment, resources, innovations, morale, motivation, etc.
External factors, however, are often uncontrollable and while you might be able to influence
the outcome, you will not be able to control it. When establishing future opportunities and
how to improve upon weaknesses, you will need to work on the controllable variables, i.e. that
in which you can change.
You also need to understand that it is very important too to prioritise aspects of the SWOT
analysis. Obviously we can all come up with a wish list of strengths, weaknesses,
opportunities and threats, but in order for it to be effective, it must be prioritised in order to

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

ascertain which are the important strengths to further develop, the strongest weakness which
should be addressed in order to avoid it becoming a threat. Furthermore, it will be important
for opportunities to be pursued with some urgency, whilst threats must be dealt with before
they cause irreparable damage to the organisation.
Advantages and Disadvantages of SWOT Analysis
SWOT analysis has the advantage of being a simple technique and one which is easily applied
to the organisation as a whole, or to a small part of it. It can even be used as a technique to
evaluate individual processes, for example. However, the technique does have some
disadvantages:
As it is so versatile, it is important to identify what you want to consider before performing
the technique. For example, is it really necessary to perform it on the whole organisation
or will one part/department be sufficient? Conversely, you should ensure you have
considered an appropriate depth of study.
Identifying strengths and weaknesses without further study can be difficult. It is often
necessary to undertake investigation before a SWOT analysis can be performed.
A SWOT analysis does not identify how important a factor is. In order to build this into
the analysis, factors must be weighted or graded in some way.
It is important to match strengths and weaknesses to competition. A strength is only
important if a competitor cannot match it.
Finally, a word of warning. It is very tempting to perform a SWOT analysis simply because of
the simplicity of the technique. It may not be called for.

Thought Showers
'Thought showers' (or 'word storms') is the modern name for a technique developed in the
1930s called 'brainstorming'. It is designed for group problem-solving/idea generation and
aims to generate a large amount of ideas in a relatively small amount of time. The group
should consist of people from many different disciplines and often different levels of an
organisation, so there are experts close to the problem and others who may have a different
perspective.
In a typical thought showers session, a group of between four and seven people are brought
together. One person acts as chairperson, encouraging the other participants, and one must
act as scribe, writing down ideas. A question, which must be specific, is then put to the group
and the group are encouraged to note down as many ideas as solutions as possible in the time
allowed. Quantity rather than quality of ideas is encouraged and no idea is analysed or
discussed. Funny or ridiculous ideas are to be encouraged. Ultimately the group will begin to
automatically build upon some of the ideas already suggested; it is often out of the more
ridiculous ideas that a creative solution appears. It is only then that ideas are evaluated.
How to Run a Thought Showers Session
Choose a subject for the thought showers (this is often selected beforehand).
Make sure everyone understands what the problem or topic is.
Each person must take a turn to express one idea or, if they are without an idea, to say
"pass".

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Have a recorder to write down each idea as it is expressed. The recorder should also take
turns to express ideas.
Write down all ideas.
Encourage all ideas. Some slightly odd ideas may trigger someone else's thinking.
There should be no criticism until after the thought showers session.
Allow a few hours/days for further thought and discuss the subject again.
Practical Advice
Thought showers sessions:
Require a group of people willing to work together.
Are generally restricted to a short length of time.
Must have a leader to keep the discussions on track.
Should be allocated a space/meeting place with no interruptions.
Criticisms of the Technique
Thought showers are commonly used but the technique is open to criticism. Research has
suggested that four individuals working alone will come up with more ideas and ideas of a
more creative nature than a group of four undertaking thought showers together. This may be
because the presence of other members of the group acts to inhibit lateral thinking. Thought
showers also require a generous input of man-hours to complete properly.
Problems can occur with thought showers sessions, as it requires discipline from all involved to
take turns, wait for someone to write everything down, and not criticise other ideas. Also, the
length of time allocated is critical, as if the time is too short then fewer ideas will be generated,
whereas if the time allocated is too long then it is very easy for the team to go 'off topic' and
start talking about other things.

Mind Mapping
Mind mapping is a technique which has its origins in the results of research into the human
brain and makes use of the fact that two of the most important aspects of memory are
association and emphasis. The graphic map produced has a certain similarity to networks in
the brain.
Like a brain cell, a mind map has a central point, which is the main subject. Important themes
then branch out from that central word or image and smaller branches are linked to the main
ones.
This technique is sometimes also referred to as spider diagrams and is often used in business
to plan a project, prepare for a presentation or make notes of a meeting. The best way of
explaining it is to illustrate it, as in the figure which follows.

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An Example of a Mind Map

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As you will see, the most important point is identified and everything else is linked to this by
means of branches and sub-branches. The technique forces you to be concise and identify
points in one word or very short phrases at the most.
Mind maps are particularly well suited to recording unstructured interviews or discussions
where there is no clear linear framework to the interaction.
As the example shows, boundaries can be drawn around particular sections of the 'web' in
order to highlight groupings. This can be done at the time or after the event, as the notes are
reviewed. The technique can actually be usefully applied to linear notes after the event in
terms of reorganising and reinterpreting them, and then expressing them in a more graphic
form.
If you now look at the diagram in detail, you will see that it provides a breakdown of the
advantages, uses and key methods of patterned notes.
Drawing a Mind Map
When drawing a mind map, you should first decide on the central subject. Then draw the
main branches and finally add the sub-branches.
You need to be aware of associated facts and of hierarchies, so you know what to emphasise.
Putting down all the relevant points and connecting them to show relationships will help you to
see how the various ideas fit together.
Advantages of Mind Mapping
Mind mapping can:
Assist in making complex decisions.
Help in organising and planning objectives.
Encourage creative thinking.
Help in problem-solving.
Help focus on key concepts.
Keep related facts together.
Enhance awareness of hierarchies.
Assist with long term memory.
Be done by individuals and groups.
It should encourage you to think of all the aspects of a problem and the various potential
solutions.

Gap Analysis
Gap analysis is a technique used to analyse/assess where an organisation currently is and to
compare this with where it would like to be, or in a health and safety context, where it should
be. The detailed results of a gap analysis identify the gaps between the present position and
the projected position. Therefore, the results are used to create a plan of action so that the
gaps are filled in and the goal(s) become realised.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Application
One important application of gap analysis in a health and safety context is the assessment of
the organisations current health and safety management system. This is often the broad aim
of a health and safety management system audit.
Set out below is an example of an action plan derived from the application of a health and
safety management system audit question set. It identifies weaknesses in the management of
safety and health, and recommends action to achieve compliance. The audit system is based
on four levels of compliance, i.e. gap analysis against:
Level 1 Basic.
Level 2 Positive action.
Level 3 Good practice.
Level 4 Best practice.
INDICATOR WEAKNESS ACTION TO ACHIEVE LEVEL ACTION TO ACHIEVE
3 LEVEL 4
Leadership Limitations in health The written statement of health Educate employees about
and safety policy and safety policy should: health and safety issues
statement. Explain the responsibilities outside the workplace as
No system to of managers and staff. part of a programme to
allocate resources Make a commitment to encourage a fit and healthy
according to the risk continuous improvement in workforce.
priorities. health and safety.
Make a commitment to
planning.

There should be a system to


allocate resources according to
risk priorities.
Integration Limited integration of Include health and safety Develop a process
health and safety performance as an issue whereby schemes to
into business for staff appraisal. encourage
planning and Devise a system to achievement of
implementation. address health and safety business objectives
No appraisal of staff issues as part of the have checks to ensure
on health and safety process of making that health and safety
performance. business decisions. objectives are not
compromised.
Extend the integrated
approach to people
outside the
organisation in policies
for the control of off-
site risks,
environmental
pollution and product
safety.
Competency Only at level 4 Health and safety
competencies should be
defined for key groups.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Performance No performance There should be


standards standards for review or performance standards for
the safety management reviewing performance.
system. There should be defined
standards that the health
and safety management
system must meet.
Setting Persons not actioned in Persons should be actioned in Existing practices and
objectives the health and safety the health and safety plan. performance
plan. standards are not
subjected to a
systematic gap
analysis.
Gap analysis is not
used to inform the
objective- setting and
planning process.
Risk control Only at level 4 Preventative strategies
systems should identify and control
risks before exposure
occurs.

Workplace Only at level 4 There should be an


precautions integrated process that
ensures that the
design of workplace
precautions takes into
account output, quality
and health and safety
requirements.
Staff should be
encouraged to apply
precautionary
measures outside the
workplace.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Active Performance is not Measure performance against Monitor health and


monitoring measured against pre- pre-determined standards. safety culture by
determined standards. periodic surveys of
employee opinions on
H&S.
Monitor behavioural
factors associated with
compliance with risk
control systems.
Include in the
arrangements for
monitoring guidance
which relates
frequency of
monitoring to the level
of risk and to trends in
the monitoring.
Reactive Only at level 4 Incident record should be
monitoring cross-referenced to identify
otherwise unreported
events.
Delivering Only at level 4 Prioritise, track and use the
improvements findings from investigations
to raise performance
standards and improve the
health and safety
management system.
Review The review process is not The review process needs to
fully developed. be developed to consider the
findings from all monitoring
activities including audits, and
to use its findings to improve
risk control systems and
workplace precautions.

Filling the Gap


The gap may have to be closed not by a single strategy, but by a combination of strategies
introduced over time and phased in as and when they can be delivered.
Gap analysis presentation can be used to help managers think about not only the scale of what
must be achieved, but also the timing of when strategies may start to impact on results.
Benefits of Gap Analysis
Gap analysis is a useful tool both in helping to set realistic objectives and as a basis for
reviewing and communicating the scale of what must be achieved.
In visual form, gap analysis combines the Where are we now? (and the Where would we be
with no further action?), with the Where do we want to be?. The gap between the two
gives management a clear picture of what must be achieved the challenge for proactive
management action.

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You can use gap analysis to communicate quickly and effectively:


Your analysis of the situation.
Financial awareness.
The quality of your objective setting.
The credibility of your strategic timing.
A summary of your business strategy.
Gap analysis is useful at every stage and level of planning.
Cause and Effect Diagrams (Fishbone diagrams)
A cause and effect diagram is an analysis tool. It is sometimes called a fishbone diagram, as
the basic skeleton looks similar to the bones of a fish. It is also known as an Ishikawa
diagram, after the professor who developed the first one in the 1950s.
The purpose of a cause and effect diagram is to help people think through the causes of a
problem thoroughly, considering all the possible causes rather than just the most obvious ones.
It is commonly used in conjunction with a thought showers session.
Drawing the Diagram
The method for drawing a cause and effect diagram is as follows:
1. Identify the Problem
The problem should be identified in detail, where appropriate including who, what, when and
where. It is important that everyone agrees what the problem is.
The problem is then written down in a box on the right-hand side of a large piece of paper.
Next draw a line from the box horizontally across the paper.
The box and the line can be seen as representing the head and spine of a fish.
2. Identify All the Possible Causes
You can do this using thought showers sessions. Dont reject anything out of hand, evaluate
suggestions or think of solutions this comes later. The emphasis is on quantity not quality at
this stage.
3. Sort the Possible Causes into Reasonable Clusters
To help organise all the possible causes, think up a small number of categories that they could
all fit into. For example, you may be able to fit safety problems into four categories: people,
equipment, systems, materials. Other possibilities are:
The four Ms Machines, Materials, Methods, Manpower.
The four Ps Plant, Policies, Procedures, People.
PEMPEM Plant, Equipment, Materials, People, Environment, Methods.
The above should be seen as useful but not restrictive approaches it is important that all
ideas are included.
4. Choose a Cluster and Label a Main Bone
For one of the main clusters, draw a line off the spine and label it. Each cluster forms a main
bone of the fish.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

5. Develop and Arrange the Bones for That Cluster


The potential causes grouped under that cluster are added to the diagram. These are shown
as smaller lines coming off the main bones of the fish.
If the causes are large or complex, it is best to break them down into sub-causes and show
these as lines coming off each cause line. If main bones get crowded, consider splitting them
up.
6. Develop Other Main Bones
Repeat steps 4 and 5 for each remaining cluster.
7. Select Possible Causes to Verify with Data
By now, your diagram should show all the possible causes of the problem you started with.
You need to confirm which are the actual causes; that is, you need to prove a relationship
between the potential cause and the observed effect. For this you need data to test your
hypothetical causal relationship. To help prioritise, your first step is to identify the most likely
causes in your diagram. In deciding which causes to focus on, it can be helpful to look at how
easy it is to gather data and also how much control you have over the factor. Generally, it is
better to initially focus on causes about which you can fairly easily collect data. However,
some important causes may need detailed investigations (or simple experiments where you
change something and observe an effect). It is also futile to focus on causes over which you
have little or no control.
There are software tools available to assist in drawing cause and effect diagrams. These make
use of a right-angled structure rather than the traditional fishbone shape.
Application of Cause and Effect Diagrams
Cause and effect diagrams represent a structured way of thinking through all the possible
causes of a problem. They enable you to carry out a thorough analysis of a situation and
search for root causes. With all the possible causes illustrated, there is the possibility for the
health and safety practitioner of reducing the likelihood of the problem occurring.
Cause and effect diagrams can also be used for process analysis.
To illustrate what a cause and effect diagram looks like, a partially developed diagram for a
forklift truck overturning is shown in the figure on the next page.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Equipment People

Brake
Driving
failure
too fast
Low tyre
pressure

Driving with
forks raised

FLT
Overturned

Steep slope

Bonus scheme encouraging


cutting of corners Uneven floor

Policies Environment

CAUSES EFFECT

Cause and Effect Diagram

Flowcharting
Flowcharts have many different uses and can be used to describe almost any process or
procedure. When a process (or procedure) is relatively complex, a flowchart is often more
suitable than a long descriptive piece of text. Many people first come across flowcharts in the
form of computer program design tools and many flowcharts use symbols that come directly
from the computing arena.
Symbols Used
On the next page is a diagram detailing some of the common flowchart symbols that can be
used, however simple flowcharts more commonly use directional arrows and decisions such as;
yes or no:

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Start Process End (or Termination)

Decision Pre-defined (or sub) process Data

Flowchart Symbols
These symbols are linked by arrows to display the process or procedure.
Simple charts are often most efficiently created by drawing by hand, whereas more complex
charts may require computer assistance.
Although many companies may adopt their own symbols and methods for flowcharts, there is
a British Standard for flowcharts, which is currently BS 4058:1987, ISO 5807-1985
Specification for data processing flowchart symbols, rules and conventions.
Nature of the Task
It is often quite a complex task to sit down and condense a familiar working procedure into a
flowchart. Team working is often an important aspect of creating realistic flowcharts. As with
many other techniques, the experience of sitting down to complete a task which requires
thinking about everyday procedures, often results in those procedures being questioned and
possibly improved. The flowchart can help in this improvement, as it graphically displays the
task and the more complex the task, the more complex the chart. When the flowchart is
simple, then the process that it represents is simple too.
Example
The example of a flowchart given on the next page graphically displays the procedure to follow
in order to decide whether a Pre-Start Health and Safety Review is required for an item of
equipment which may need additional guarding. (A Pre-Start Health and Safety Review
includes a written report on the installation of new equipment or modifications to existing
equipment. The report details the measures necessary to bring the installation or modification
into compliance with the applicable regulations. The Pre-Start Health and Safety Review is
undertaken before start-up and ideally at the design stage. The employer must address any
measures necessary to bring the installation or modification into compliance before production
begins.)
We can see how a complicated procedure is simplified in flow form.

Flow Chart 3 Guarding


Provisions Exemptions Is either of the following used as a protective
element in connection with an apparatus?
1. a safeguarding device that signals the apparatus
to stop, or
NO 2. a barrier guard that uses an interlocking
mechanical or electrical device.
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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

YES

Was the apparatus manufactured in accordance


with and does it meet current applicable standards, NO
or has it been modified to meet them?

YES
NO
Was the apparatus installed in accordance with the
manufacturers instructions and current applicable
standards?

YES
NO
Was the protective element manufactured in
accordance with current applicable standards, does
it meet them or has it been modified to meet them?

YES
Was the protective element installed at the time
that the apparatus was manufactured?
YES
NO

Was the protective element installed in accordance NO


with the manufacturers instructions and current
applicable standards, if any?

YES

YES Is the documentation required by subsection 7(10)


that establishes the exemption available in the
workplace?

NO
YES NO
Can the documentation be obtained?

Pre-Start Health and Safety


Pre-Start Health and Safety Review IS required
Review NOT required
Flowchart Example
Flow Process Charts
Another form of flowchart that is often used in industry is the flow process chart. Whereas
information on the processes that a part goes through can be recorded in the form of text as

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

shown below, this route sheet does not allow the easy identification of operations (or value-
adding processes) against transportation, waiting, etc. The detail can be very useful, but for a
quick analysis or analysis by non-experts, the more general flow process chart is helpful.
Part Name: Widget 45 Date: 5/5/0X
Part No.: W45-07 Issued by: RRC
Operation Dept Description Equipment
1 6 Punch blanks 07491 punch press
2 7 Press blanks into form 06311 press
3 11 Spray paint 03522 autopainter

Route Sheet
A step-by-step description of how products are produced is given by a flow process diagram.
These flow process diagrams use a standard set of symbols as shown below.

SYMBOL MEANING

Operation

Transportation

Inspection

Delay

Storage

Symbols Used for Flow Process Charts


An example of a typical flow process chart follows.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Details Flow Comments

1. Slit coils sheared to desired


length Machine 480

2. To machine 335 30m

3. Punch blanks and stack into


boxes

4. In boxes

5. To machine 376 25m

A Flow Process Chart


The symbols on the flow process sheets are often pre-printed and all that is required is to fill in
the text and shade the correct symbols. This type of chart gives a very clear view of the
stages that a product goes through on the shop-floor. Value is added only when the item is
undergoing an operation and anything other than an operation is waste. This makes the flow
process charts very useful for improving processes and reducing unnecessary steps in
production.

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BSC International Diploma | Unit 3

Element 3B: Developing the Business Case for Health and


Safety

C O N T E N T S

Study Unit Title Page

3B7 Gaining Senior Management Commitment

COMMITMENT OF SENIOR MANAGEMENT .......................................................................................................... 3


RESPONSIBILITIES OF DIRECTORS AND SENIOR MANAGERS................................................................................................. 3
ISSUES IMPORTANT TO SENIOR MANAGEMENT ................................................................................................ 5
COMPANY STRATEGY ............................................................................................................................................... 5
PERSONAL LIABILITY ............................................................................................................................................... 6
CORPORATE LIABILITY ............................................................................................................................................. 6
LIKELIHOOD OF ACHIEVEMENT OF EXPECTED PERFORMANCE ............................................................................................... 6
LIKELY RETURN ON INVESTMENT ................................................................................................................................ 6
GAINING COMMITMENT ............................................................................................................................................ 7
PERSUASION THROUGH EFFECTIVE COMMUNICATION ..................................................................................... 9
THE STAGES OF THE PERSUASION PROCESS ................................................................................................................. 10
SOME TECHNIQUES FOR BUILDING RAPPORT ................................................................................................................ 12
CONFLICT RESOLUTION ......................................................................................................................................... 13
BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

BSC International Diploma | Unit 3

Element 3B | Developing the Business Case for Health and


Safety

Study Unit 3B7 | Gaining Senior Management Commitment

Learning Outcomes
When you have worked through this Study Unit, you will be able to:

Outline the issues important to members of a senior management team.

Persuade senior management through effective communication.

Unit 7:

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Commitment of Senior Management


It is essential that the importance of good health and safety management is understood by
top-level management and their commitment displayed by:
Producing a health and safety policy.
Establishing a safety committee, where appropriate.
Ensuring they have appointed personnel who are competent in fulfilling the requirements
of health and safety legislation.
Appointing and consulting safety representatives.
Setting up suitable training programmes for their employees.
Ensuring health and safety is an agenda item at all management meetings.

Responsibilities of Directors and Senior Managers


In most medium and large organisations, the 'employer' is the organisation itself, and the
responsibility for fulfilling the employer's duties for health and safety will fall on the
management of the organisation. Senior management comprising the Board of Directors (or
Council, etc. for public sector bodies) and senior management team (including the Chief
Executive) has particular responsibility for setting general policy and objectives for the
organisation as a whole and is accountable for the fulfilment of that policy and achievement of
those objectives. This applies to health and safety as much as to any other aspect of the
organisation's goals, such as making profits or protecting the environment.
The particular responsibilities placed on directors and senior managers, as applied to health
and safety, are as follows.
Directors
All directors, both collectively and individually, have ultimate responsibility for ensuring the
proper conduct of the company. In particular, they must ensure that:
The company fulfils its legal responsibilities for health and safety ensuring that the
organisation's policies are reviewed as appropriate in order to secure continuing
compliance with existing policies, current legislation and any changes in the law.
The organisation's policy is properly defined and reflected in appropriate strategic and
operational objectives, and that arrangements are in place both to evaluate performance
in relation to these objectives and to appraise the objectives themselves.
The necessary resources are made available to maintain sound and efficient health and
safety arrangements.
Responsibilities for health and safety are properly assigned within the management
structure and accepted at all levels, and that appropriate arrangements are made at
senior management level for example, through the appointment of a health and safety
director or senior manager.
Appropriate leadership is given by senior management in relation to both the importance
of health and safety arrangements and their continual improvement.
The Managing Director has particular responsibilities in respect of his position as the leader of
the Board of Directors. Each director will also have personal responsibilities in respect of his

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

areas of responsibility within the organisation and relationship with senior managers and other
employees.
Effective management of health and safety risks will help:
maximise the well-being and productivity of all people working for an organisation;
stop people getting injured, ill or killed through work activities;
improve the organisation's reputation in the eyes of customers, competitors, suppliers,
other stakeholders and the wider community;
avoid damaging effects on turnover and productivity;
encourage better relationships with contractors and more effective contracted activities;
and
minimise the likelihood of prosecution and consequent penalties.
Guidance recommends that every board should appoint one of their members to be a 'health
and safety director'.
Senior Managers
The senior management team will be accountable, collectively, to the Board of Directors in
general, and individually to particular directors in their own specialist areas, for the strategic
objectives and plans through which company policy and overall objectives are achieved. In
respect of health and safety, they must ensure that effective arrangements are in place
throughout the organisation for the achievement of the organisation's written statement of
policy.
To achieve this, they will have particular responsibility for:
Drawing up plans for, and monitoring the implementation of, the organisation's health and
safety policy.
Allocating resources for health and safety procedures and measures, and for associated
training programmes.
Ensuring that lower levels of management give health and safety the appropriate priority
by reference to their responsibilities.
In carrying out these responsibilities, senior management will work with lower levels of
management middle management and supervisory staff. They will, therefore, need a
detailed understanding of the responsibilities of these lower levels and, indeed, will themselves
have these same responsibilities in respect of all employees for whom they have an operational
responsibility.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Issues Important to Senior Management


Decision-making in companies is a complex process and one that is influenced by a number of
factors including:
Legislation.
Company culture.
Company history (including accidents and ill-health).
Business forecasts.
Cost-benefit analysis.
Employee participation and consultation.
The economic effects of health and safety policy need to be considered at company level so
that senior management can:
Take a balanced decision concerning the allocation of company resources.
Bridge the gap between health and safety needs and management requirements and
desires.
Company Strategy
A company's strategy is simply the statement of method(s) that will be used to achieve the
objectives. Strategies can be complex or simple, depending on the circumstances and the
level or complexity of the corporate plan.
It is rare for there to be only one way to achieve something, which means that multiple
strategies may be considered and should be compared for effectiveness. Taking into account
all the possible outcomes and implications of adopting a strategy, the best method needs to be
selected.
The main point of strategy selection is that the strategy chosen must be the best option
available, taking all circumstances into account, to achieve the objective. It should be capable
of being justified - which means that you should be able to show that it will achieve the
objective.
Corporate or Strategic Planning
The strategic planning process is planning which covers the entire organisation and begins
with the very highest level of decision-making. Corporate planning takes the long-range
perspective - its timescale will vary from one type of industry or organisation to another, but is
usually thought of as being at least five years.
Corporate planning is comprehensive in that it embraces plans for all parts and all aspects of
the organisation. However, it is flexible; it sets out to anticipate and cope with changes arising
both from the outside environment and within the organisation.
Corporate planning shows the way in which the objectives of the organisation can be achieved.
Implications for Health and Safety
It is important to link health and safety goals with the company's long-term strategic
objectives. There is a danger that top managers and policy-makers will arrive at strategic
decisions without adequately involving health and safety professionals and the representatives
of the workforce.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Developments in corporate social responsibility make it possible to integrate a company's


health and safety policy at the strategic level. Organisations which do this can expect to reap
benefits in terms of a higher reputation, increased share values, greater productivity and
customer loyalty.

Personal Liability
It is important to relay to directors and senior managers of your company that they may be
personally fined, imprisoned or face personal civil claims for varying breaches of health and
safety law. As health and safety practitioners it is important that you advise managers and
directors within your organisation of the consequences they face for breaching health and
safety laws.

Corporate Liability
As well as facing the possibility of personal sanctions for poor management practices, a senior
manager will also be influenced by the sanctions placed on the organisation for serious
failures. Although they may not be personally liable for an offence, any penalties awarded
against the company (and the resulting poor reputation of the company) will be a considerable
factor for the senior manager, not least because if the company fails to perform, then the
manager may suffer as a consequence
Likelihood of Achievement of Expected Performance
Expected figures in terms of profitability and turnover are some of the issues that are
important to senior management. After all, profits are vital to the succession of most
organisations.
In order for managers to achieve the expected figures/targets (especially when budgets,
resources and manpower levels are reduced), health and safety requirements are often given a
back seat or are even not undertaken. After all, many managers feel that implementing
health and safety measures will lead them to miss their targets. Health and safety is often
seen as an unnecessary burden.
Therefore, it is the skill of the safety practitioner when gaining the commitment of senior
management to prove that implementing health and safety measures will not necessarily result
in under-achievement of expected figures. It is also important for the safety practitioner to
emphasise that expected figures may actually be exceeded as a result of implementing health
and safety measures thus meaning greater profits for the organisation in the long term.

Likely Return on Investment


Senior management will be concerned with the likely return on investment, both from the
internal point of view (profitability) and from the point of view of those investing in the
company (shareholders' return).
Two reports by the European Agency for Safety and Health at Work, Corporate Social
Responsibility and Safety and Health at Work and Quality of the Working Environment and
Productivity, underline the importance of treating improvements in health and safety as an
investment in competitiveness, not as a cost. Such improvements can make a significant
contribution to a company's financial health, as well as the personal health of its employees.
Poor performance in health and safety matters can lead to a competitive disadvantage, with a
consequent detrimental effect on the company's status among its stakeholders. This should be
a motivating factor to company management to invest in health and safety.
Health and safety should be integrated into investment processes, not just added to them.
Many investments are of a technical nature and incorporating health and safety considerations

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into them would help to maximise them and ensure a faster return. For example, money spent
on better design and training may lead to quicker achievement of production and quality
targets due to fewer breakdowns and reduced need for adjustments and corrections. For
investors in a company, a number of core health and safety indicators have been identified as
being important:
Whether a director has been named as health and safety director.
The level of reporting of the health and safety management systems.
The number of fatalities.
The lost-time injury rate.
The absenteeism rate.
The costs of health and safety losses.
The American Society of Safety Engineers has stated that it "knows from data and anecdotal
information that investment in a safety, health and environmental programme is a sound
business strategy, for any organisation regardless of size, and will lead to a positive impact on
the financial bottom line".
Gaining Commitment
The European Agency report mentioned earlier, Corporate Social Responsibility and Safety and
Health at Work, makes the following recommendations for health and safety professionals:
Build on existing activities. Make sure that health and safety achievements are evaluated
positively.
Make use of available experiences. Try to address internal motives before legislative
requirements.
Define strategic aims. There is a close relationship between mental health issues, modern
human resource management and employee satisfaction.
Try to build partnerships with stakeholders. This may open up new perspectives for
progress.
Balance people, plant and profit. Try to identify common underlying values and make
strategic connections by stressing the common aspects.
Balance external and internal aspects. For example, good working conditions have a
great impact on the labour market.
Show and develop leadership. Try to give managers a better understanding of the
company benefits from excellence in health and safety.
Implementation: "walk the talk". Safety and health are strong values make sure they
become part of the company culture. Set the right priorities to make health and safety a
strategic issue. Act strategically and live up to the values you advocate.
Develop ownership and support. You can initiate, co-ordinate, communicate, etc. but not
be responsible for the company's health and safety performance. Managers and workers
are the real owners of safety and health targets, problems and possible solutions.
Don't be afraid of ethical considerations and value aspects. Ethical statements may have
a greater impact on behaviour of people than rational argument. In many companies,
safety and health is a regular activity. Regular things don't get strategic attention very
easily.

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Go for opportunities:
Is safety and health really of strategic importance?
Are safety and health values really tangible in day-to-day practice?
Are the financial benefits from safety and health clear enough for top managers?
Is the impact of good working conditions on the labour market and the company
image clearly assessed and used as a driver for safety and health?
Organisational learning and development:
Is safety and health strategy suited for responding proactively to constant changes in
the outside world?
Are new issues and risks anticipated in a timely manner?
Does safety and health play a role in organisational and technological development?

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Persuasion through Effective Communication


Persuasion is a powerful force in the communication process.
Persuasion is the act of getting another person to believe or do something. The word has
connotations of overcoming resistance. "You will have to work hard to convince me" is a
common response when we want to bring someone round to our way of thinking. People have
a reluctance to change their views and beliefs. If you have the ability to bring about this
change, then you have the power of persuasion.
Persuasion is a skill which is important inside the organisation. It has, of course, always been
an important skill to be able to persuade one's boss.
Colleagues' reaction may be that the organisation is sympathetic to your persuasive message.
Based on previous experience they may make your task easier. Their reaction may be that
"You were right last time, you will probably be right this time". However, the move from
traditional hierarchical organisation structures to people-based ones, has created a workforce
who are 'empowered'. They are encouraged to accept responsibility, and part of this is to
question decisions. In this situation, persuasion is not so easy a task.

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The Stages of the Persuasion Process


Roger Black, in Getting Things Done, outlines the following steps in the persuasion process:

Set objectives

Develop a belief and desire to succeed

Identify decision-makers

Build a rapport, trust and confidence

Gain control of the meeting

Discover organisational and personal needs of the person

Relate your case to their needs

Ask for agreement

Don't give up if rejected

Steps in the Persuasion Process


Setting Objectives
Ask the question of yourself, "What do I want to achieve?" It is helpful if, before the
meeting, you imagine yourself having been through the process and leaving. What is the

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ideal outcome? What do you want to take away with you? These are objectives of the
persuasion process.
It helps to write down your objectives. It clarifies them in your own mind. Are there
alternative objectives that you would accept? A structured set of objectives helps to
decide the action to take during later steps of the process.
Developing a Belief and Desire to Succeed
A successful persuader has a positive frame of mind. They:
Look for the right opportunity when success is most likely.
Don't think of failure.
See the positive points in the person they want to persuade.
Identifying the Decision-Makers
Ask the question, "Who makes the decision?". They are likely to be the person with the
budget and/or the authority. There are also influencers, people who do not have the final say
but can have an enormous effect on a persuasion process.
Building Rapport
Lack of rapport with the person you are trying to persuade makes the task much more difficult.
Rapport builds mutual confidence, allowing honest and open communication. Ways to better
rapport include:
Asking more questions to find out about the other person - likes, dislikes, habits, hobbies,
etc.
Trying to put yourself in their shoes.
Trying to find out what motivates them from an organisational and personal viewpoint.
Not feeling vulnerable or negative about yourself - it can rub off.
Sympathising with the other's cause even if it is opposed to yours.
Not making early statements of opinion.
Doing and saying things that develop trust and confidence in you.
Gaining Control of the Meeting
Gaining control of the persuasive conversation does not mean being a bully. It is, however,
true that you will not persuade people if you cannot direct the discussion. Not allowing the
other person to speak is not the same thing as having control. Control is achieved when you
get them to speak about what you want, when you want.
To assist in gaining control:
Use eye contact during talking and listening.
Ask questions, so that you appear to be driving the conversation.
If you do not get the answers you want or expect, probe a little deeper, but without being
rude.
Keep quiet. A silence in the conversation can draw out information from the other person.
They feel they have to speak to fill the vacuum.

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Practise the discipline of listening to what the other person is saying, and then repeat it
back to them. It indicates that you are on top of the conversation.
Discovering Organisational and Personal Needs of the Person
People will do things if it satisfies and pleases them. One skill of persuasion is to find those
needs and satisfy them. Emotional needs are the innermost drives and desires. At work they
are identified as survival, being liked, being respected. It will be difficult to persuade a person
to take a course of action which puts their job at risk, or makes them unpopular. Logical needs
are easier to establish; investigation and questioning should establish what is wanted.
Relating Your Case to Their Needs
It is the persuader's responsibility to interest the other party in the proposal. Like a good
salesperson you have to sell the benefits rather than the features. The local police force where
I live now work 12-hour shifts - but they have four days off in every eight. It is safe to assume
that the four-day break was seen as a benefit.
Asking for Agreement
When all of the previous steps of the process are complete, then is the time to ask for
agreement. Do not ask a closed question, one that can be answered with a 'No'. Offer
alternatives if possible - you stand a chance of keeping the conversation alive rather than
being rejected outright. Above all, don't be afraid to ask.
Not Giving Up if Rejected
If you are absolutely convinced of your case for persuasion then there is no reason why you
should give up. Analyse why you failed; was it because of not meeting emotional or logical
needs? Was your case not strong enough? Could it be improved? Try to 'leave the door open'
by suggesting other meetings, or a modification of your proposals.
Persuasion requires:
Conviction that you have a good case.
Courage to pursue it.
Skill in questioning.
Skill in listening.
Skill in analysing people's personalities.

Some Techniques for Building Rapport


Matching
A simple technique that can be very effective is matching your posture with that of the senior
managers. The aim is not to mimic them (which would be seen as rude) but you can, for
example, see how they sit and try to sit the same way. A good strategy may well be to let
them sit first and then follow their lead. Should they adjust their posture, then you should
then do the same, usually after a few moments. The aim of this is to ensure that you are
'speaking the same language' with the group, not just verbally, but non-verbally as well. The
way that you sit is just as important a part of communication as the words that you use.
Some people cannot keep still and keep moving around, and constant readjustment in this
case would be impractical. Gretz, Drozdeck and Wiesenhutter have suggested a concept that
they call "cross matching". The idea is that you should match some of your posture to
senior management without making the complete change. For example:

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If they sit with legs crossed, cross your arms and keep your feet on the floor.
If their arms are crossed, cross your wrists, your legs or your ankles.
A manager who leans back in the chair might be cross-matched if you just lean to the side
and slightly back.
If the manager puts a hand on his chin, you can cross-match him by putting your hand
near your head. As long as your hand is in a similar position, you are fine.
If a manager is sitting with legs spread apart, you can cross-match by having your arms
open.
The key aim is to achieve a rapport with the senior managers. There is a simple test of
whether or not you have achieved this. If you have been matching the managers' body
posture for some time, try changing your posture slightly and see if they change as well. If
they do, you have achieved a rapport at a subconscious level. If nothing happens, try
matching for a further period and then try this exercise again.
Pacing
Different people have different pace in the way they speak. Some of us speak quickly, others
speak more slowly.
Some people speak very quickly. These people tend to feel very comfortable with other people
who also speak quickly. Such people may find slow speakers a little annoying. They may
perceive them as being somewhat dull, boring and even stupid.
The opposite tends to be the case as well. Slow speakers may find fast speakers rather
aggressive and a little annoying. They may possibly also perceive them as being insincere.
It is therefore important to think about the pace of the other person and to try to match the
speed that they feel comfortable with.
Mirroring the pace of the other person is a good practice but great care has to be taken in
doing this. It is very easy to come over in a way that is unacceptable or to sound patronising.
Leading
It is likely that senior management will be responding to your body language and it is vital to
lead with a suitable body language approach. Examples of this might include a genuine smile,
frequent eye contact with the group, responding with appropriate facial expressions, and
adopting a suitably open posture.

Conflict Resolution
We can define organisational conflict as "any perceived clash of interests between individuals,
groups or levels of authority in an organisation". The potential for conflict in many
organisations is considerable and is often related to a clash between organisational goals or
needs and individual goals.
When organisational and personal goals are pulling in different directions, there is likely to be
conflict. A successful organisation is usually the one where individuals have the opportunity to
satisfy their own goals by contributing to the goals of the organisation.
Causes of Conflict
Conflict may be related to differences in goals, working methods, facts or values and beliefs.
Different situations call for different solutions. It is infinitely more difficult to address
differences in values and beliefs than facts. Conflict may arise because:

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Resources are limited and there is competition for them.


Different people may have different information available.
Perceptions may differ.
The situations or roles of individuals differ.
Conflict becomes apparent from people's actions and attitudes. They may not listen to one
another. Some may try to dominate others. Ideas may be blocked rather than supported or
built upon. Within any organisation, people have their own ideas about priorities for
themselves and for the organisation, which sometimes conflict with the 'official view'.
A side effect of conflict is stress, which can occur whenever an individual is put in a position of
having to attack or defend. As stress builds up so equanimity is eroded and the propensity to
argue, disagree or openly oppose grows, with the risk of an escalation of potential conflict.
Often the cause of the conflict is either obscure or not appreciated by those taking entrenched
positions.
A special case of conflict arises when the demands of a position clash with the ethics of a
profession. This is a situation faced by many of the professions accountants, doctors,
solicitors, etc. and safety practitioners. In all these cases there is a pressure resulting from the
requirements of legislation but, in the safety practitioner's case, he has the added pressure of
being in direct contact with, or indeed often reporting to, the person who is creating the
conflict. Thus he is placed in the position of having to decide between job security and
professional ethics:
Should he resign if his advice is consistently subjugated for less safe but more productive
methods?
Should he continue to provide advice to the best of his ability, in the knowledge that it will
only be partially acted upon, with consequent increased risk of injury to an employee and
at worst a possible breach of legislation?
Is there another solution that will satisfy the demands of production and at the same time
ensure the necessary high standard of safety?
How a safety practitioner resolves this sort of problem will depend on his role in the
organisation, his interpersonal skills and the culture of the organisation.
Avoiding conflict can at times be very difficult to achieve. Suffice it to say that the safety
practitioner must exercise his discretion, patience and, perhaps above all, his good nature.
One of the main causes of conflict within an organisation is staff not understanding well
enough both their own work role and also that of others around them.
Other causes of conflict include:
Differences of opinion on courses of action.
Personal animosity between individuals.
The refusal of individuals to conform to organisational norms and values.
Conflict and Change
In many cases, the introduction of change is accompanied by conflict within an organisation.
It is therefore vital that conflicts can be resolved so that a harmonious working environment
can be restored.

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During periods of change, conflict can occur because of the following:


Personality clashes: change often brings people of differing personalities into new
relationships.
Communications: poor communication can result in misunderstandings and confusion,
which can fuel conflict.
Conflicting interests: change can alter the power relationships within an organisation.
Lack of leadership and control: this can result in a lack of clear direction, which can
lead to conflict as different people interpret the scenario for change in different ways.
Negative and Positive Aspects of Conflict
Conflict which is essentially negative would include:
Conflict caused by stress amongst individuals.
Conflict which is highly emotional or emotive, generating uncontrolled anger or distress to
those concerned.
Conflict which becomes personal.
Conflict which is long-standing and on-going.
Conflict which has its source elsewhere and the issue in point is an excuse to air a more
general grievance.
Conflict which is misdirected.
Conflict can have some positive effects, however:
It may cause people to question the approach or decision taken.
It may stimulate creative solutions.
It can release tension and air issues which would otherwise demotivate the individuals
involved.
It can prompt individuals to assess their own feelings and choose between options.
It can challenge and perhaps lead to a change in the existing power base, thus acting as a
catalyst for change.
Handling Conflict
Broad Approaches
There are two broad approaches to conflict:
Unitary Approach
This involves the notion of the common aims of the organisation, i.e. the well-being of the
organisation and how all involved have the same basic interest in that well-being.
According to this view, conflicts arise because people do not fully appreciate where their
true interests lie. There has been a failure to convince them that their best interests lie in
co-operation and not conflict. According to the unitary approach, the best way to tackle
conflict at its roots is to generate team spirit and company loyalty.

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Pluralist Approach
This recognises that the organisation is made up of various groups whose interests and
goals may differ. Conflicting parties will both benefit from identifying issues of
compatibility.
Conflict should be controlled by balancing the various interests. The causes of conflict are
brought out into the open and hard bargaining takes place.
Conflict-Handling Modes
The different behaviour patterns which individuals adopt in order to resolve conflict depend on
the results of two different desires:
An attempt to satisfy their own objectives.
An attempt to satisfy the objectives of others.
In order to attempt to satisfy his own objectives, an individual's behaviour will lie between
assertive at one end of a continuum and non-assertive at the other end.
In order to attempt to satisfy the objectives of others, an individual's behaviour will range
between co-operative and unco-operative.
These different behaviour patterns give rise to a number of conflict-handling modes as follows:
Competition is required when quick, decisive action is needed. It is important to use
competition behaviour on issues that are vital to an organisations health, safety and
welfare and in circumstances when you know you are right. This mode however, is not
likely to result in conflict resolution.
Collaboration is required when important information from both sides cannot be
dismissed. It therefore requires solutions to be integrated with insight from people with
different perspectives on a situation. However, this style of behaviour can lead to conflict
resolution in favour of one party, but it can also lead to resentment on the part of the
other.
Avoidance should be undertaken when an issue that you are dealing with is trivial and
whereby other issues are more important and therefore should be concentrated upon. In
some cases it is advisable to withdraw from certain conflicts to allow people to cool down
and recollect their thoughts. It is also important to avoid conflict that can be solved more
effectively by others. Again, this method is not going to lead to conflict resolution.
Accommodation occurs when you put other peoples interests first. You will have to
accommodate others perspective on conflicts especially if you are wrong about a situation.
It is also important to be accommodative when issues that are not important to you, are
important to others. To demonstrate accommodation shows commitment to other
peoples ideas, cooperation and a sense of self-sacrifice to others that will help when
seeking resolution.
A compromise may be attained, such that each party gets partial success in achieving
his objectives. There are consequently no winners or losers. Compromises can be made
to temporary fix complex issues. They can also be used as a form of back-up when other
methods such as competition or collaboration methods fail.
Strategies for Resolving Conflict
Various actions are open to the safety professional:

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Encouraging the parties to share opinions and discuss the situation in pursuit of a
solution.
Encouraging all parties to respect one another's viewpoint irrespective of personal
feelings.
Promoting active listening to ensure that everyone understands the thinking behind the
actions of others.
Encouraging openness between all concerned, so that feelings come to the fore.
Looking for a consensus and a mutually satisfactory outcome for all.
Confronting people and telling them bluntly that the situation is unacceptable and must be
resolved.
Focusing on the goals and objectives of the organisation and building shared values
across the organisation.
Nearly all conflicts have some 'middle path' which can be pursued so that all parties are
satisfied with the outcome. This requires co-operation rather than conflict, so the various
parties need to be brought together to pursue positive outcomes.
According to Mullins (Management and Organisational Behaviour), the strategies adopted will
depend on the nature and source of the conflict, and are likely to include some or all of the
following:
Clarification of Objectives
The clarification and refinement of objectives and performance standards will help to
avoid misunderstandings and conflict.
Resource Distribution
It may not always be possible to increase the allocated share of resources, but senior
managers may be able to be flexible in their allocation if there is a problem.
Leadership and Management
In a conflict situation, a participative and supportive style of leadership and managerial
behaviour is likely to be more successful than an autocratic style.
Socio-Technical Approach
Conflict may be reduced by viewing the organisation as a socio-technical system, in which
psychological and social factors are developed in keeping with structural and technical
requirements.
Maintaining Good Relations
Remember that it is harder to build new bridges than to keep existing ones in repair. You will
need the support of senior management in the future and will be valued for an objective and
reasonable approach. Therefore:
Consider whether the conflict may be beneficial.
Clarify the point of conflict.
Listen carefully to the other party's views.
Communicate your views clearly and unemotionally.
Identify the points of difference and the common ground.

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Consider the options:


Is compromise possible or advisable?
Is there a third alternative acceptable to both?
Establish criteria for choosing between the two views.
Once decided, support the decision.
An example of maintaining good relations might be an office environment where it is too hot to
work. The staff and unions want air-conditioning installed immediately, while management
think the environment is perfectly acceptable to work in. To maintain good relations, the
health and safety practitioner may take the middle ground, advocating the provision of
frequent breaks and fans as a better solution for both workers and management in the short
term.

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BSC International Diploma | Unit 3

Element 3B: Developing the Business Case for Health and


Safety

C O N T E N T S

Study Unit Title Page

3B8 Constructing a Business Case for Health and Safety

WHEN A BUSINESS CASE FOR HEALTH AND SAFETY IS NEEDED ....................................................................... 3


MAIN ELEMENTS OF A BUSINESS CASE FOR HEALTH AND SAFETY .................................................................... 4
SOURCES OF INFORMATION FOR DEVELOPING A BUSINESS CASE FOR HEALTH AND SAFETY ......................... 7
COST-BENEFIT ANALYSIS ................................................................................................................................... 8
EXAMPLES OF SIMPLE COST BENEFIT ANALYSES .............................................................................................................. 10
PUTTING TOGETHER A BUSINESS CASE ........................................................................................................... 12
IDENTIFYING THE SIGNIFICANT FACTORS .................................................................................................................... 12
INFLUENCING THE RIGHT PEOPLE.............................................................................................................................. 13
PREPARING THE MEANS TO PRESENT THE BUSINESS CASE ................................................................................................ 13
LEARNING FROM FAILURE ....................................................................................................................................... 14
BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

BSC International Diploma | Unit 3

Element 3B| Developing the Business Case for Health and


Safety

Study Unit 3B8 | Constructing a Business Case for Health and


Safety

Learning Outcomes
When you have worked through this Study Unit, you will be able to:

Describe the main elements of a business case for health and safety.

Use sources of information to develop a business case for health and safety.

Carry out a simple cost-benefit analysis.

Construct a business case for health and safety.

Unit 8:

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When a Business Case for Health and Safety is


Needed
As we have previously discussed, control of health and safety should be just one aspect of an
organisation's total risk management approach. Health and safety should not be seen in
isolation.
It is being increasingly recognised that board level leadership is a key element in ensuring that
health and safety is properly managed. Directors who lead by example from the top are
extremely influential.
At the highest level, if there is no direct responsibility for health and safety on the board, then
they need to be convinced of the business case for making someone directly responsible. This
is needed for good support of company-wide initiatives such as culture change programmes.
At a lower level, there are circumstances which routinely arise when you need to put together
a business case for specific projects or equipment to improve health and safety. Essentially,
you need to put together a business case whenever you need to justify funding and other
resources for which you have not already budgeted; this may have to be more elaborate for
projects that require larger resources. The need for funding may become apparent from
reactive data such as near-miss, ill-health or injury reports. For example, in a production unit
there may be a considerable number of manual-handling-related injuries. This may be traced
to a particular operation. You may therefore consider purchasing mechanical handling
equipment (such as a conveyer) for which you had not budgeted and for which you may
therefore have to present a specific case for funding.
Similarly, monitoring results may demonstrate that you are routinely exceeding statutory or
recommended airborne exposure limits for a particular workplace contaminant such as
formaldehyde. You may need to upgrade to more effective, but considerably more expensive,
control measures. Changes in the law and the further clarification of guidance, as well as
improvements in technology (and the price of that technology) may all change the goalposts
as to what is considered reasonably practicable. This, too, may force an upgrade.
You may also be thinking more strategically and wanting to implement a behaviour-based
auditing system as a step towards improving awareness and developing a more positive safety
culture. This often involves buying in some proprietary system (such as DuPont Safety
Training Observation Program), with its supporting workbooks and videos and considerable
worker training. This costs money and the benefits may not be seen for some time by budget-
holders. You therefore need to consider your arguments carefully in order to get the funding.

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Main Elements of a Business Case for Health and


Safety
Managing health and safety risks is consistent with business aims. A fundamental purpose of
most businesses is to make a profit. In earlier study units, we have already looked at the
economic case for health and safety the enormous costs of accidents and ill-health, including
pain and suffering to the individual. We looked at direct, indirect, insured and uninsured costs.
These result in reduced turnover, reduced productivity, compensation claims and increased
insurance premiums.
The board sets the general policy of the company (including aims and objectives). This is why
board-level responsibility for health and safety is so important. Commitment from the top sets
an example for others and increases the profile of health and safety, communicating that it is
as important as other business aspects like production. A clear, consistent policy from the top
ensures that health and safety is properly managed in the organisation including allocating
the proper resources and setting clear expectations of performance and accountability. It can
ensure that company-wide standards, monitoring and reporting systems are applied for a more
proactive, rather than reactive approach.
To put forward a business case for health and safety in your organisation, you need to
highlight the benefits that it will bring. You cannot expect businesses to invest money in
something without a fairly clear idea of what the benefits might be. Of course, not all benefits
may be clearly defined in financial terms or even guaranteed, but organisations are used to
business risks; a business would never grow without some element of calculated risk. It is
best to identify specific areas where improvement is needed, showing what poor performance
is costing the company and the anticipated benefits that the programme will bring.
Organisations are not independent of their environment. Ignoring the regulatory constraints,
their continuance in business is reliant upon a number of factors:
External inputs, including:
Raw material and energy suppliers (including those from whom you might license
technology or know-how).
Personnel/recruitment (you cannot force people to work for you).
Financial backing from investors and income from sales.
Outputs, including:
Products and services.
Undesired events such as accidents.
Reputation.
Environment this is the marketplace from which you get your inputs and to which you
send your outputs. If you have no place to sell your goods or no-one will buy them, you
will not survive.
Failure to give sufficient attention to health and safety is a very significant threat to the
viability of the business. Good health and safety costs money, but poor health and safety costs
even more. Poor health and safety performance can have a negative effect on profits, the
balance sheet, cash flow and the availability of future investors, as we have seen in earlier
study units on the costs of accidents. The repayment period for one-off safety investment

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

costs is often quite short, being seen in reduced accident costs, reduced civil claims, reduced
absenteeism, reduced business disruption, etc. Recurring costs from maintaining health and
safety systems are just a normal part of running an efficient, productive business.
Whatever the market into which you sell your goods or services, reputation (or at least
perception of it) is a significant element. If people lose confidence in your organisation, not
only will sales be affected, but the share value of the company will drop as investors bail out or
are dissuaded from involvement.
Some of the benefits of health and safety of course directly influence costs. Others are more
subtle, influencing efficiency and productivity by improving co-ordination, competence, control
and co-operation within the organisation. These are best seen by example. A number of case
studies from well-respected companies in the UK which illustrate the business benefits of
health and safety and the importance of director leadership, good communications, training
and worker involvement are summarised in the table which follows:
Company Industry Some of the things that they Some of the business
Sector do benefits
Taylor Construction As part of an H&S management Minimised costs of
Woodrow Plc system: claims, injuries and
Measure, encourage and delays.
reward behaviour which Seen as the company of
creates a safer working choice for productivity
environment - reward and efficiency for
based on commercial and workforce and sub-
health and safety contractors.
performance. Enhanced reputation as
Provide training. a responsible business
Use professional health helps to: sell product,
and safety advisors. recruit/retain people,
Set safety targets and reduce insurance
monitor performance. premiums.
Sites with the best
safety performance are
the most productive,
profitable and
predictable.
Hickson and Manufacturing Management and unions Accident reduction.
Welch co-operate to improve Reduced compensation
H&S performance. claims and insurance
Commitment from the top. premiums.
Set H&S targets. Low absenteeism.
Reward schemes for good Greater productivity
performance. (due to higher morale,
Involve workers. involvement, co-
operation).
Enhanced reputation (3
major H&S awards + 2
environmental awards in
4 years).

Company Industry Some of the things that they Some of the business
Sector do benefits
T L Visuals Ltd Printing Invest in equipment to Reduced accidents.
reduce need for manual Higher productivity

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

handling. (higher morale, less


Active health management absenteeism).
and rehabilitation Better staff retention.
programme.
Severn Trent Utility System for managing Large reduction in time
Water manual handling activities. off through manual
handling injuries.
Large reduction in
liabilities due to future
claims from manual
handling injuries.
Enhanced reputation
and publicity.
Royal Mail Public Sector Implement a Large reduction in lost
comprehensive H&S time due to accidents.
management system. Large reduction in
annual civil claims.
Huntsman Petrochemicals Implement "BSAFE", a Considerable cost
Petrochemicals proprietary behavioural- savings (250,000/year)
based safety program. from reduced steam
leaks (identification and
making repairs).
32% reduction in
insurance premiums.
Significant reduction in
operating costs (workers
identify and repair
steam leaks
themselves).

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Sources of Information for Developing a Business


Case for Health and Safety
So, where do you start? We have already identified the sort of information that is needed for a
business case. You need to get a grip on the costs of the proposed improvements and the
benefits you anticipate and compare these to the current costs of doing nothing. You need to
present convincing moral and legal, as well as financial arguments.
An organisation that is failing in health and safety performance will often recognise this chiefly
from reactive monitoring data, i.e. through poor near-miss, injury and ill-health statistics. By
analysing the statistics by type, days lost, etc., approximate costs can be determined for the
current situation of taking no specific further action. Depending on how successful your
planned project is, these costs will (at least partially) turn into savings/benefits. You may need
to refer to industry guides or insurance data on this. Data on civil claims and potential civil
claims for injury types can also be incorporated. In an increasingly litigious society, such costs
can only go up. Be realistic about the projected savings from reduced accidents and increased
efficiencies arising from the proposed improvements. Accident trends should also be
examined, since they may indicate a worsening situation over time. They may also prove
useful later to assess the benefits after implementing the improvement programme.
Comparing these statistics to industry or national performance will indicate how poor the
performance is and may be an additional motivator to encourage funding. As mentioned
earlier, changes to the law can have implications for health and safety spending. It is now
routine for proposed legislation to be accompanied by a regulatory impact assessment at the
consultative stage. This may give an early indication of the potential impact to your business.
Remember, legislation may not only introduce a technology burden but may also introduce a
need for further human resources to administer additional systems. New legislation is
appearing all the time and some of this will require significant expenditure, even to conduct an
initial assessment to establish whether you fall within its scope. Related to this are revised
codes of practice, guidance, standards and the outcome of civil and criminal cases. These will
change what is now considered adequate and force businesses to upgrade equipment and
systems.
Audits are a useful proactive technique. Auditing involves looking at the total health and safety
management system and analysing its efficiency, effectiveness and reliability. The audit report
is valuable; it is wide-ranging and is based on interviews with employees, observation of the
workplace and examination of documentary evidence. The report will summarise the main
non-compliances (more serious deficiencies such as failure to abide by a specific law or permit)
and findings (less serious deficiencies). These will indicate initial areas for special projects for
which funding may be needed. Indeed, a formal response may be required for an audit finding
involving putting together a plan with timescales, costs and resources to correct the
deficiency. So, the audit results/scores can be directly compared with other organisations or
sites within the same organisation. This indicates how far below other similar
organisations/competitors you have fallen which can only help the case for investing in the
health and safety programme.
The results of monitoring and audits feed into health and safety reviews. It is useless simply
to accumulate data. Reviewing is where you take stock of your data and see how it compares
with where you wanted or expected to be. It is an evaluation of performance. The gaps will
enable you to see what needs action for improvement.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Cost-Benefit Analysis
Cost-benefit analysis is a conceptually simple tool for helping you make a decision as to
whether a particular course of action or project is in fact viable or cost-effective. In its
simplest form it is an entirely economic argument (rather than moral or legal). It is an
essential persuasive tool for the safety practitioner because, not only is it systematic and
simple, but it is also commonly used and understood by business people. For this reason,
proposed new regulations are almost always accompanied by a regulatory impact assessment,
which contains a cost-benefit analysis to assess financial impact of the proposals on UK
businesses.
In principle, you simply add up all the benefits associated with a programme and then subtract
all the costs. Sounds simple doesn't it? In practice, there are a number of complications:
Not all costs and benefits can be assigned a reasonably accurate financial value.
Though we know that intangible things such as 'reputation', 'public/shareholder
perception', 'worker morale', 'worker co-operation and involvement' may have an impact
on efficiency, productivity, shareholder investment and sales, their value can not be fully
quantified financially though it may be possible to propose an estimate.
Benefits may not be seen immediately.
It may take several years to reap sufficient benefits to 'break even'. This is known as a
payback period. It includes the benefits of reduction in civil liability claims and reductions
(or no trend of further rises) in employers' liability insurance premiums.
Some costs and benefits are one-off, others are recurring.
For example, if your project requires the purchase of a new piece of machinery, there is
the initial one-off cost of the machine itself, installation, commissioning and any specific
training. There are also the annual on-going running costs such as energy, maintenance,
testing, etc. For 'software' projects such as implementing a safety management system or
a behavioural safety programme, there might be a need to hire extra permanent
personnel to manage and administer the system, as well as costs associated with annual
external audits/re-certifications.
In Study Unit 1A1, we looked at typical sources of costs in relation to health and safety.
Benefits can be along similar lines (removing a current source of cost is a future saving, i.e. a
benefit of implementing the project).
Costs of the project (some of which may be on-going as well as one-off costs) can arise from:
Equipment including its associated installation, maintenance, software, licences.
New personnel (salary) or perhaps greater utilisation of an existing resource.
Training for new/existing personnel.
Costs associated with disruption to normal working:
Temporary workers to cover workers training/being trained or overtime.
Delays to existing projects.
Lost production/sales (plant shut down while equipment is being installed).
Benefits may arise from such things as:
Projected reduction in accidents with attendant savings from less time off.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Projected reduction in civil claims.


Projected reduction in insurance premiums (or bucking the trend of increases due to
repeated claims).
Increased productivity (i.e. reduced cost per unit) this may seem difficult to quantify,
but just think about how much time might be saved, translate this into man-hours,
multiply by a correction factor (say 0.5, since time saved is not always wisely used!) and
express this in money terms.
You must be prepared to provide and defend at least estimates of the benefits that you
perceive. You will need to analyse your annual accident statistics and consult with your
personnel, legal and finance departments to arrive at estimates for some of these benefits.
Initially you should try to stick to costs and benefits for which you can provide at least
plausible estimates. The more intangible elements for which no financial estimate can be
agreed are of more persuasive value. Once you have estimated costs and benefits, you can
calculate a projected payback or break-even point. The earlier this is the better of course, but
some projects are more long-term. Even so, do not expect to be greeted with enthusiasm if
your projected payback period is much over three years; short payback periods are much more
attractive to higher management.
Let's take some of the UK examples noted in the previous table, which are illustrative of some
of the savings that can be made.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Examples of simple cost benefit analyses

Severn Trent Water

Costs

One-off costs (in first year):


Physiotherapy
Ergonomics support
Working group staff costs
Specialist equipment
TOTAL: 53,000

Annual running costs:


Physiotherapy 2,000/annum

Benefits

Anticipated annual savings:


Halving days lost through manual handling
injuries 19,000/annum

Also anticipation of reducing civil liability claims


(currently around 166,000/annum)

Anticipated payback time on investment: 2 years


Royal Mail

Costs

Annual running costs:


Two safety advisors (direct and indirect costs)
+ management systems
160,000/annum

Benefits

Projected annual savings:


Fewer days lost
Fewer compensation claims
Lower legal costs
370,000/annum

Anticipated payback time on investment: 6 months

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Huntsman
Costs

Annual running costs for BSAFE program:


Co-ordinators (training, time, salary)
Software
TOTAL: 238,000/annum

Benefits

Projected annual savings:


Energy savings 250,000/annum
Reduced insurance premiums
(unspecified saving)

Other benefits:
Environmental

The UKs HSE has developed a Ready-Reckoner website which is designed to assist
organisations with establishing costs associated with a range of failures including ill health
cases, accidents, incidents and injuries. It allows for the input of data and will perform
calculations showing the likely true costs associated with the failure.
It is recommended that students review the website which can be viewed at
http://www.hse.gov.uk/costs/index.asp. It will be a valuable resource in relation to preparing
the business case for the Unit 3 assignment.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Putting Together a Business Case


Depending on the size of the company, business cases can have different degrees of formality.
For some organisations, funding may be based on an informal chat; in other organisations, it
may require a formal multi-stage approval and presentation. Either way, you need to have
your case worked out especially where there is competition for the same funding. More
attention will be given by managers where larger sums are involved.

Identifying the Significant Factors


The first step in putting together a business case is to identify the significant factors necessary
for the case.
The business case is not simply a cost-benefit analysis though it will include this. The
business case should:
Explain the background to the problem (i.e. what the problem is and why you think
something should be done).
Explain the consequences of doing nothing (business as usual) this might be the risk of
prosecution, a major accident just waiting to happen, escalating civil claims, repeated
business disruption, etc.
Discuss significant possible solutions there is rarely just one possible solution but some
are better for the business than others.
Put forward a recommended solution the best overall risk management approach,
together with anticipated start/end dates, plans, assumptions and things/people upon
which the success of this approach depends.
Justify the recommendation in terms of overall costs and value to the business, customers
and, specifically, company finances (cost/benefit). Use the moral, legal and financial
arguments. It is useful to identify sensitive costs too; these might be a large proportion
of the overall cost and also have associated uncertainties. For example, you may have
budgeted a certain amount for consultancy, but if you come up against problems, this
could spiral out of control. So, try to make sure that as many costs as possible are fixed.
Be realistic too and, if appropriate, you may need to present worst-case and likely-case
scenarios to illustrate better the limits to the range of business risk. This not only helps
managers think about business risk, but also helps keep expectations of costs/timescales
realistic. Remember that your project will not be the only one competing for funding.
Address reasonable questions/objections/issues/problems that a director might raise, such
as the potential for spiralling costs if the project runs into a snag.
Be supported by all the technical documentation and details it must stand up to close
scrutiny. You can't afford to gloss over things or be shown to have misrepresented things
this could undermine the whole proposal.
If applicable, include provision to demonstrate the recommended technology, e.g. by
reference to similar cases of successful implementation (which might set a precedent)
and/or by having the equipment supplier on hand to demonstrate the benefits for visual
impact.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

People are often more convinced of the case for improving something when the consequences
of not doing anything affect them directly. For example, many people, including those who
hold financial purse-strings, have to use computers. If the system keeps crashing because the
company has outgrown the server resources, people can directly taste the
unpleasant/irritating/business disruption consequences of doing nothing.

Influencing the Right People


The next step in putting together a business case is to identify the people that need to be
influenced and determine the most efficient means to obtain the positive influence of these
people.
The people in your organisation who need to be influenced will ultimately be those who set
policy and control budgets. For some projects this may well be the production director or
managing director, but in the first instance your immediate line manager. Influencing people
starts before then, however. You need to get others on your side who can support your
argument and help make it more persuasive. If your planned project has significant
productivity/efficiency or capacity gains, it makes sense to 'sell' your case to the production
manager, who may then support your case. Similarly, if the project is likely to result in
additional sales or other customer benefits (for example, piloting an in-house scheme which
could potentially be sold outside the company), then it pays to get sales managers and
customer services managers on your side. They can then act as sponsors for your project who
can accompany you in a presentation meeting. In fact, if a specific department, like
production, is the main beneficiary of the project, it would be best for you to get the head of
that department to make the case, supported by you. This is because the beneficiaries will
make it happen they will be keen to receive the benefits as early as possible.
A company-wide initiative would require board approval. You need to think carefully about
how you might positively influence them what do you need to do to convince and motivate
them?

Preparing the Means to Present the Business Case


Having decided on what needs to go into your case, you need to present it. This may be
informal but, more often than not for large sums, it is by a formal presentation and/or formal
report/justification to the board of directors. Remember that while your report or presentation
needs to be technically accurate and persuasive, it should also be interesting and informative.
If it is technically brilliant but stupefyingly boring to read, it will only harm your case. It should
engage your readers or listeners. Your presentation should make good use of visual impact
tools such as video footage, graphs/charts (rather than lots of tables of data or small font size
text). Similarly, your report should make good use of graphs/figures, but should also be
supported by all the detail needed for the case (perhaps as an appendix).
Software packages such as Microsoft PowerPoint or OpenOffice.Org Impress are excellent tools
for presentations, as the materials can be updated/modified on-the-fly, i.e. while you are
actually presenting. OHP slides are an alternative, but cannot be so easily modified and are
increasingly being overtaken by the software packages already mentioned. Put sufficient effort
into the design and choice of words to create a professional impression. Larger companies
may have a standard template for slides which you can use.
When delivering a presentation, do not simply read a script either practise the presentation
sufficiently so that you can give it naturally with the minimum of prompts.
Have to hand all the supporting materials (handouts, full justification/report, case studies,
perhaps even a demonstration) and be prepared to answer searching questions.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Learning from Failure


It is always important to identify the areas that caused a failing report to miss its target.
Your proposal may not be successful. For a formal case at least, there may be an official
reason why the proposal was refused. This may not, of course, be the only reason (or indeed
the main reason). You may be able to get direct feedback from the approvers on why your
case did not succeed. It may be that the proposal was far too expensive in the light of the
current financial climate, or that your assumptions were wrong. It may be as simple as the
fact that you did not clearly communicate what it was that you wanted to do. This is
particularly difficult with projects which do not appear to have any tangible cash value the
benefits being 'soft'. Analyse your proposal from the business point of view:
Did the business case address all the issues?
Did it include all the elements mentioned at the beginning of this section?
Were the benefits clear or woolly?
Were the costs and timescales realistic?
Was the language appropriate?
Did you argue persuasively or dogmatically?
Did you influence enough people?

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BSC International Diploma | Unit 3

Element 3B: Developing the Business Case for Health and


Safety

C O N T E N T S

Study Unit Title Page

3B9 Writing Business Reports

FORMAL AND INFORMAL REPORTS .................................................................................................................... 3


FORMAL REPORTS .................................................................................................................................................. 3
INFORMAL REPORTS................................................................................................................................................ 4
STRUCTURE OF REPORTS ................................................................................................................................... 5
GENERAL FORMAT .................................................................................................................................................. 5
DOCUMENT LAYOUT ................................................................................................................................................ 5
THE USE OF APPENDICES AND ABSTRACTS ..................................................................................................................... 7
PRESENTING DATA GRAPHICALLY AND NUMERICALLY ..................................................................................... 8
TABULATING DATA ................................................................................................................................................. 8
TYPICAL GRAPHICAL MEANS TO PRESENT DATA............................................................................................................... 9
USING COMPUTER PROGRAMS TO GENERATE GRAPHICAL DATA .......................................................................................... 12
PRODUCING AN EFFECTIVE WRITTEN REPORT ................................................................................................ 15
WRITING A REPORT .............................................................................................................................................. 15
AIM OF THE REPORT ............................................................................................................................................. 16
CONTENT OF THE REPORT ...................................................................................................................................... 16
APPROPRIATE WRITING STYLE ................................................................................................................................. 18
REVIEWING THE REPORT ........................................................................................................................................ 20
ISSUES RELATING TO REPORT DISTRIBUTION ................................................................................................ 22
MEANS OF PUBLISHING .......................................................................................................................................... 22
EFFECTIVE DISTRIBUTION ...................................................................................................................................... 22
DOCUMENT CONTROL ............................................................................................................................................ 22
DISTRIBUTING CHANGES ........................................................................................................................................ 23
ARCHIVE COPIES ................................................................................................................................................. 23
BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

BSC Awards International Diploma | Unit 3

Element 3B | Developing the Business Case for Health and


Safety

Study Unit 3B9 | Writing Business Reports

Learning Outcomes
When you have worked through this Study Unit, you will be able to:

Write a formal or informal report as appropriate.

Structure a report appropriately for its purpose.

Use effective ways of presenting data graphically and numerically.

Produce an effective written report.

Outline the issues relating to report distribution.

Unit 9:

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Formal and Informal Reports


The business report is the document used for the formal dissemination of specialist,
researched information. The commission and production of reports is crucial to the
achievement of the objectives which organisations set themselves.
Report denotes a function - to carry information. It also denotes a format. Alone it will mean
different things to different people. That is why normally you will see: formal report, informal
report, company report, management report, etc.
The audience knows what to expect when it asks for a particular type of report. The people
concerned expect a certain style, a certain structure, and then they know how to cope with the
data. If they expect one thing and receive another, it can only confuse.
The presentation style of a report is prescribed by its format. A formal report will follow the
methodology laid down by the organisation; a company report follows the requirements of
company law.
Management reports are action-planning documents, generally written in the third person.
They do more than report on a situation: they make positive recommendations for action.
If the manager who receives your report can act directly upon it, then you have written a good
report. Therefore your recommendations must be:
Firm.
Clear.
Unambiguous.
Decisive.

Formal Reports
For a formal report, it is usual to have the following headings/sections and structure:
Report title (this should be brief, specific and informative).
Recipients name.
Authors name.
Date.
Contents table (including headings and page numbers) if the report size warrants this.
Terms of reference (which should outline the scope of the report and the reason why it is
being written).
Procedure or research method/methodology (should identify how the information in the
report was obtained).
Findings (relevant facts and findings in order of importance, or chronological importance,
or just grouped together in relevant categories).
Conclusion (should summarise the main findings and should not introduce new findings).
Recommendations (not always required and only used if there are solutions to a problem
which has been identified and these solutions have emerged from a detailed analysis in
the report).

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Appendices (where there is a large amount of factual data, tables and diagrams that could
interrupt the flow of the document and cause confusion; appendices appear at the end of
the report and their presence should be highlighted; each appendix should be numbered).

Informal Reports
For an informal report, it is usual to use the following headings:
Introduction.
Findings.
Conclusion.
Or:
Purpose and scope of report.
Background information.
Findings.
Conclusions and recommendations.
Reports are not always written; sometimes brief oral reports or summaries of meetings are all
that is required.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Structure of Reports
General Format
The format of a report may differ according to its aims, content and target audience. In
general, however, the pattern will be as follows:
Preface title page, contents and abstract.
Introduction.
Main body.
Conclusions and recommendations.
We will look at this in more detail when we discuss the content of a report later in the study
unit.

Document Layout
The structure of a report exists to guide the reader through what you have to say. It helps to
make the information and arguments being presented more accessible and clear. A short
report which is written in a continuous flow of text, like a chapter in a book, can discourage
even the well-motivated reader. People feel at a loss with a mass of words and are reluctant
to start reading at all. If they do take the plunge, it can be difficult to follow arguments and
to check out and refer to points at a later stage.
Therefore, the structure must be inviting to the reader, and help them to follow the discussion
throughout.
There are four key aspects to consider here:
The flow and development of ideas.
Headings.
Numbering.
Layout.
The Flow and Development of Ideas
All reports need to have a logical flow from one point to the next. This does not necessarily
have to be linear, in that point A follows directly after point B, which is then followed by point
C. It may be that, for example, there are some points arising from B which are best developed
there and then, so the flow may go A, B, D, E and then back to C. What is important, though,
is that the reader is able to follow the flow and know exactly where they are.
Structure your report into clear and intelligible paragraphs, each with a coherent theme. Each
new line of argument needs a new paragraph, and there should be a clear progression from
one paragraph to the next.
Drawing out the development and connections in this way makes the communication flow from
point to point in a smooth way. You can also assist this by directly linking paragraphs to each
other - for example, setting up the next paragraph by the way in which you end the preceding
one, or beginning the next one with a point raised in the previous one, which is then
developed further.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Headings
Use headings and subheadings as signposts for the reader. They guide the reader to the
specific subject under discussion and indicate the relationships between different topics by the
way in which topics are brought together under particular headings.
Subheadings bring out the hierarchical relationships between information. (This is
considerably helped by numbering, as we discuss below.)
Headings should be concise and as explicit as possible. They are often used to scan a report
in order to pick out particular information and therefore vague headings do not make this very
easy.
Numbering
Numbering has two purposes:
It helps to show the relationships between information - so, for example, sections
numbered 1.1, 1.2, etc. are clearly subsidiary to a section numbered 1.
It facilitates reference to particular parts of the report, either internally within the text or
by readers in discussion of it - as in, for example, see paragraph 4.
There are many different ways of doing this. For example, main section headings may be
numbered 1, 2, 3, etc. with subsections numbered 1.1, 1.2, etc. Further subheadings could
also be numbered, although this can tend to get excessive and be distracting (e.g. 1.3.7).
Layout
The way in which information is set out on the page can be a considerable aid to the
structuring of a report, as well as assisting readability and emphasising meaning.
There are a number of rules and guidelines about laying out material.
Text Alignment
Text, as in this course, is normally left-aligned. This means that it has a consistent left-
hand margin and appears straight on that side. The right-hand edge of paragraphs or
blocks of text is ragged.
Text may also be right-aligned - the opposite of left-aligned where the straight edge is on
the right-hand margin and the left-hand edge of paragraphs is ragged. This is rarely used
in normal text.
Justification refers to the setting out of text blocks so that there is a straight edge to both
the left- and right-hand margins. This is common in newspapers. It is achieved by
varying the spaces between words - something that used to be done only by trained
printers, but is now done automatically by word processing software. The appearance
can seem very neat, but some odd results can occur where only a few long words make
up a line and they end up being spread out widely.
Centred Text
Centring text in the middle of a line or a page gives it impact and is often used for the title
of a document and for section titles. It can only be applied to small amounts of text,
since it is not easy to read. It may be used, though, for the whole of a title page for a
report or for quoting text from another source.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

Bullet Pointing
Bullets are the little symbols inserted before a line or paragraph of text. Word processors
offer a number of options for these you will notice that we have used a small black
closed circle and dashes in this course.
They are used to give emphasis to a series of points and as such are common in
documents using lists.
Colour
Printing in colour can add impact. You must be careful not to overuse variations in colour,
however, since this can confuse as easily as emphasise. However, cost can be a negative
factor for using colour in a report.
White Space
White space on a document serves to give emphasis to the black of the text. Such space
includes margins at the top, bottom and left- and right-hand sides of the page, and the
space between paragraphs and lines of text.
Allowing plenty of space around the title of a document can make it stand out. Similarly,
you should leave space between points in a list. However, beware of leaving too much
space. It is important to maintain the link between lines and paragraphs and too much
space can make them seem disconnected.
Use of Graphics
Illustrations and other visuals can add impact to a document. The graphic should relate
to the subject matter of the communication. You must, though, be careful not to make
them a distraction from the main body of the text or the message it seeks to convey.
Graphs and diagrams can sometimes convey a message more quickly than words or
numbers. They are particularly appropriate for showing statistical information in an easily
accessible form and for illustrating the relationship between things.
We will return to this subject shortly.

The Use of Appendices and Abstracts


Avoid lengthy appendices wherever possible, as they may in fact detract from the body of the
report. You should, as much as possible, demonstrate an ability to abstract appropriate
information from different sources.
Only include documents that are essential to the understanding of the report (e.g. inspection
reports, risk assessments, long tables and diagrams). They should be clearly indexed for
cross-referencing. Publications such as Codes of Practice or Guidance Notes should only be
cited as a reference and not be included in an appendix. It may be appropriate to use only
extracts of documents rather than full documents.

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Presenting Data Graphically and Numerically


Presenting statistical data in an effective visual way is an important and powerful skill in
business communications, whether it is used in reports, presentations or meetings.
Whether you are dealing with a small or a large amount of data, it is always important to
consider how you are going to present it. By choosing an appropriate method, you can
demonstrate important features of the data and highlight significant patterns. By using
different techniques of tabulation and presentation, you can transform raw data into
meaningful information.
To decision-makers it is not the statistics themselves which are important, but their
interpretation. The key point is that statistics on their own are not necessarily significant, but
they are important to lend support to other statements. Thus, statistical information should
not be presented for its own sake, but should be used in relation to the points being made in
the report or presentation.
Graphical representations of findings are often much easier to understand than a written
report. In addition, where most people have very little time for reading reports, a table, graph
or pie chart can often give a clear indication of the results obtained with very little time or
effort put in by the reader.
Whilst graphical representation is a good way of presenting information, it can also be very
confusing for the reader. For this reason, it is important to ensure that tables, graphs and pie
charts are presented clearly with all columns and axes labelled appropriately. Care should also
be taken to provide a clear and meaningful heading to any graphical representations.
It is also important to choose the right form of graphical representation for the information
which you want to get across to the reader. Too much information can be confusing and will
not be effective, e.g. a line graph with too many lines. It is always easier to see a relationship
between different factors from a diagram rather than from a table of data. Pictorial
representation always improves a report, but adds to the costs of production and reproduction
and so should be used wisely.
Different representations can be used to show differing information:
Tables tend to show numbers which are aligned into columns and rows. Spreadsheets
can be used with mathematical formulae included. Often these spreadsheets can then be
converted into graphs.
Pie charts can be used to show how a total is divided up, and give a pictorial idea of the
proportions represented by the data.
In line graphs the gradient or slope of the line shows the rate of change of the various
quantities.
Stacked bar charts or histograms are able to show more information than a line
graph. They give some indication of proportion and also some indication of the rate of
change of the values used.
Tabulating Data
One of the basic ways of analysing data is to tabulate it. Putting data into a table gives it
form, structure and a meaningful order. Although this can be done manually, today it is mostly
done with the aid of a spreadsheet on a computer. Spreadsheets are a very powerful way of
analysing data.

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Tabulation is also important to present statistical information or as a means of structuring text.


The use of tables to summarise information in terms of relationships or under headings gains
from the fact that in tables you do not have to use full sentences. The information is
presented in truncated form and is likely to be more easily absorbed, although it is important
to remember that this is a summary device and fuller discussion of the issue raised will
probably be necessary elsewhere.
The value of numerical data may be increased many times by effective tabulation. Tabulation
is the systematic arrangement of collected numerical data which promotes a reasoned
interpretation. It depends on a logical classification of the data into clearly defined groups,
each with characteristics of its own (for example, employees by gender, or age group, etc.).
The information is then set out clearly in the minimum space and with the minimum wording.
When preparing tables, try to observe the following rules in order to avoid some of the
problems that can occur with tabulated data:
Each table should serve a single purpose, as attempting to show more than one group of
relationships in the same table tends to obscure the message.
The table itself should have a title or caption, and each grouping of information must have
a heading, all of which should be as short as possible and self-explanatory.
Tables should not contain figures with a large number of digits; expressing all figures in
thousands (with an indicative header, x 103) is better than writing them all out in full.
The number of columns and headings should be kept to a minimum, as a multiplicity of
headings prevents proper emphasis being given to key facts and tendencies shown by the
table.
Units must always be stated ($000s, age, etc.).
Figures showing relationships, such as percentages, ratios, etc., should be placed as near
as possible to the figures from which they are derived.

Typical Graphical Means to Present Data


Bar Charts
The bar chart is one of the most common methods of presenting information in a visual form.
They are similar to graphs (see later) in that they display the incidence of one variable in
relation to another (for example, number of accidents against time), but are more flexible in
that greater amounts of information can be incorporated; for example, showing breakdowns of
components of a variable.
There are basically three types of such charts:
Simple bar charts, which are equivalent to line graphs but provide a stronger visual image.
Component bar charts, which show the make-up of the data being illustrated.
Histograms, which display grouped frequency data.
A simple bar chart consists of a series of bars representing the amount of one variable in
relation to another. Usually a small space is left between each bar to allow them to stand out
from each other. The length of each bar corresponds with the magnitude of the item it
represents.
In addition, you can add figures for comparative purposes and display them as bars next to
each other.

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A component bar chart can be used to give a breakdown of the total amount within each
bar of the chart.
The bars can be presented vertically or horizontally, but can also be stacked in component bar
charts and grouped in multiple bar charts. Bar charts should not usually have more than 12
bars or the chart can become confusing.
Bar charts can be enhanced by the use of 3D effects, although you would have to use a
computer presentation package to display this effectively.
Histograms
We looked at histograms in Study Unit 3A5 and you should revise the topic at this point.
Pie Charts
We also looked at pie charts in Study Unit 3A5 and at this point you should remind yourself of
what we said there.
Alternative forms of pie chart presentation are the exploded pie chart, in which the segments
of interest are emphasised by separation from the main pie, and 3D charts. Both of these are
far easier to produce using computer presentation software. Examples follow.

B
A C
C
A

Key:
Site A 63%
Site B 15%
Site C 22%

Proportion of Injuries for Each Site


Make sure that the diagram is clearly labelled, using a separate legend or key if necessary,
and consider whether the actual figures for each segment should be shown (since it is not
possible to read them exactly from the diagram itself). Any text must be clearly written and
accurate. Shading or colours can emphasise key areas.
It is best not to use pie charts with more than four or five component parts.
Cusum Charts
Cusum charts was another means of presentation that we looked at in Study Unit 3A5, so
again you should revise the topic here.

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Line Graphs
As we saw in Study Unit 3A5, a graph (or line graph) shows the relationship between two
variables. Many graphs are needed to show all the values in a table of data. It is possible to
plot a number of sets of values on one graph if one of the variables remains the same for
each. The slope of the graph shows the rate of change.
Line graphs illustrate the movement of one variable against changes in another variable; for
example, safety indicators such as involvement in traffic accidents against age (see the
following figure).

Age

Graphs can also illustrate comparative trends by including figures for several products or
different time periods on the same diagram. Lines may be differentiated by the use of
different types of line or, where available, by colour.
There are some general rules to remember when planning and using graphs:
All graphs must be given clear but brief titles.
The axes of graphs must be clearly labelled and the scales of the values marked; the
origins of scales should generally be included.
Wherever necessary, gridlines should be inserted to facilitate reading.
Be aware that you can distort the information you are presenting if the axis on graphs does not
start from zero. Trends in the top part of a graph will be more exaggerated than if you see the
whole picture with zero at the bottom left-hand corner.

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Similarly, if you use a set of line graphs but use a different scale on each of them, you could
distort the information.
Using Computer Programs to Generate Graphical Data
Availability and Types of Software
Computer programs for data storage or analysis will be based on either a database or a
spreadsheet format. There are likely to be quite a number of related programs which are
called in to perform tasks and operate equipment.
The spreadsheet can be likened to a very large sheet of graph paper or a very large table that
can be filled with data. Words or numbers or a mathematical formula can be entered into each
square. Columns and rows can be added, and quite complicated calculations performed
between values in the various squares. This type of program can also produce graphs and
other visual presentations of the data.
The database program is quite similar and can store data in the form of numbers or phrases.
It is rather like having lots of spreadsheets (or tables) which can be linked by common 'fields'
or storage areas. A database program could store information about injuries with a separate,
but linked, field for name, number, address, work area, injury, time of accident, reason for
accident, time off work, etc. It is possible to search through the whole of the database looking
for those records with a particular value or statement in a particular field. For example, if you
wished to know how many accidents involved an injury to the hand, where protective gloves
were not being worn, you would make a search in the field of "part of the body injured" and
combine this with "gloves worn" in the PPE section.
Many programs will assist in an audit of the health and safety performance of the organisation,
and will perform calculations and produce a report, with all the graphs and diagrams, ready to
place on the managing director's desk.
Production of Reports
Once you have your computer program up and running, you can use it to produce a number of
reports. These reports can be produced on a regular basis to suit your company needs. The
reports could look at the numbers of accidents or incidents, for example, or the results of an
audit. The reports produced can be extremely useful and can be produced in a format to suit
the reader. For example, it may be appropriate to send monthly accident statistics to local
managers and, because they are so busy, some simple graphical representations of the
numbers and particularly the numbers which correspond to their area of responsibility. The
board of directors, however, may require more in-depth information, particularly if there are
high risk areas. To compile these reports by hand would be extremely difficult and time-
consuming, but a good computer program makes light work of producing easy-to-read,
accurate reports.
Presentation of Data Using Spreadsheets
There are many styles available and it is quite easy to choose the most appropriate for a given
situation by examining the menu of styles presented and the illustrative examples provided.
When using the Microsoft Excel spreadsheet, the chart menus are accessed by clicking on the
button with the coloured column chart icon.
Computer packages offer you the facility of producing graphs and charts that have a three-
dimensional appearance. However, sometimes the cosmetic benefits of blocking out areas of
graphs and charts can be outweighed by the problems of readability. The problem is that it is

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difficult to see how the 3-D lines and bars line up against the relevant scale, so data values are
difficult to determine.
Using the following example spreadsheet, which shows a simple health and safety budget for
several departments, we can show some examples of the corresponding charts. As charts are
a picture, they make it much easier for people to assimilate the information.

A B C D E

Dept 1 Dept 2 Dept 3 Dept 4

1 H&S budget 1,000 1,500 900 1,200


2 Expenditure to date 200 300 150 250
3 Funds remaining 800 1,200 750 950
4 Projected expenditure 160 240 150 190
5 Funds available 640 960 600 760

Spreadsheet Example
Using the charting facility in the spreadsheet software, various graphical representations of
data can be produced.
The following are both bar charts. The first is a cluster bar chart, while the second is a
stacked bar chart.
1500

1000

500

0
1 2 3 4

H&S budget 1000 1500 900 1200

Expenditure to date 200 300 150 250

Funds remaining 800 1200 750 950

Projected expenditure 160 240 150 190

Funds available 640 960 600 760

Bar Chart 1

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100%

80%

60%

40%

20%

0%
1 2 3 4

Funds available 640 960 600 760


Projected expenditure 160 240 150 190
Funds remaining 800 1200 750 950
Expenditure to date 200 300 150 250
H&S budget 1000 1500 900 1200

Bar Chart 2

Next is a simple pie chart.

Funds available

H&S budget
Projected expenditure

Funds remaining Expenditure to date

Each of these charts shows the same information in a different style. The style chosen will
depend on what information we want to highlight and what we feel shows this aspect off best.
This is a subjective choice and we will each have our preferences. The important point, as
always, is that the communication must be successful. To achieve this, simplicity is always the
best course to take.

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Producing an Effective Written Report


Writing a Report
Report writing lends itself to a formal, factual and objective style. It is an analysis of a
situation characterised by clear, purposeful research, a summary of the main findings and
realistic recommendations. Prejudice or emotional responses to the findings or research are
inappropriate.
Many reports require some primary as well as secondary research. This must be carried out
without bias or prejudice, otherwise the findings of the research are irrelevant and
inappropriate. One of the ways in which objectivity is seen to be employed is by referring to
the process, findings or recommendations in the third person - hence, I found out that
becomes It became evident that.
If the writer has received a proper brief as to the purpose, use and dissemination of the
report, then it is easier to use appropriate tone and style from its inception.
The writer must have a clear idea as to the following:
Who has commissioned the report? For what purpose?
What are the objectives of the report?
What is the timescale?
Who is to receive the report? What do they want the information for? How will they be
able to act on the recommendations?
What costs are likely to be incurred in the production of the report? Are they borne by a
department or section or unit, or does a request for additional funding have to be made?
Is it a formal document?
Will it be circulated to external organisations?
What language will be appropriate?
How important will technical words and phrases be to an understanding of the reports
purpose and intent?
Is there a required format for the production of the report?
Will an executive summary be required?
What assistance, if any, will be available from others within the organisation?
Will there be a requirement for progress reports or a draft report before presentation or
publication?
Will the author be required to present the report? When? To whom?

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Aim of the Report


When writing a report, consider:
What do I want to achieve?
Who is going to read it?
In health and safety, the aim of a report is to bring matters to the attention of
employers/managers so that they will take action. This action will often need financial
backing, time, commitment and a change in attitude on the part of individuals and the
organisation as a whole. Your report must therefore put forward structured and convincing
arguments, in simple, easy-to-read language, supported by practical examples and statutory
references.
Any management report must be written with a clear objective or purpose in mind. That
comes down to three main points:
Convince the audience that you have completed the analysis and have a firm grasp of the
situation.
Ensure that the audience has a positive attitude towards you and the job you have done
you must come over as credible, thorough, realistic, knowledgeable, etc.
Be sure that the audience understands that your recommendations are based on your
analysis and so can be trusted and relied upon.
For your recommendations to be taken seriously, you must convince your audience that you
have:
Undertaken a thorough analysis of the situation.
Identified all the alternative courses of action and considered each of them.
Content of the Report
A written report needs to say what you have done and what you have found out. It needs to
make a clear distinction between what is factual and what is opinion. Perhaps most
importantly the report needs to be written in a style that is easy to read and understand and
only includes text that is relevant (sometimes "less is more" try to avoid 'waffling'). The
audience that it is aimed at should also be considered: non-technical people will not
understand technical wording or jargon and so this should be avoided; the managing director
doesn't have time to wade through a huge report and, therefore, either a short report or a
good summary at the front of the report should be provided.
Generally, your report will be made up of the following components:
Title
This should be as short as possible and make it clear what the report is about. You
should give your name (and qualifications where appropriate) and the date of the report.
Contents
For longer reports, with many sections and subsections, it is useful to give a list of
contents. Number the sections and give page numbers for main sections. This also helps
cross-referencing within the body of the report.

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Abstract
This is a short summary which states the aims of the report and the main findings and
recommendations. The reader can use it to decide whether he wants to read the report.
Introduction
This sets the scene and gives the reason for the piece of research. It might give a
hypothesis which is being tested, or some idea as to why this approach has been used.
In your introduction, you should always make the purpose and objectives of your report
clear. Briefly identify the problems or issues you are trying to resolve and explain what
approach you are going to take and what legal aspects of health and safety apply.
Main Body of Report
This is usually split up into logically headed sections, for example:
Method used.
Apparatus or experimental techniques.
Procedures.
Important constraints or legislation.
People involved.
There will then be the results, and any treatment of the results.
Essentially, the main body of the report should contain the data or findings to support
your arguments and recommendations, as well as referring to any legal, economic or
moral reasons for proposed actions.
State the facts simply, one point at a time and in a logical sequence of events. Explain:
What was observed.
Why it was a hazard.
How the law applies to the situation(s).
What the possible consequences are.
Include long checklists, risk assessments, graphs and tables in an appendix rather than
make the body of the report too long. The main thrust of the report should concentrate
on discussing findings.
Results
This is the major purpose of the report and so these should be presented in the best way
so that they visually stand out. We discussed graphical representation earlier.
Discussion
This is where you have a chance to be critical of your methods and findings and discuss
any relevant points of interest. While it may not be possible to repeat any of your work,
you could suggest how the analysis might be improved upon in future.
Conclusions
This is a brief statement of what your report has discovered. Each conclusion should be
cross-referenced to the facts as set out in the main body of the report. No new material
should be introduced at this stage.

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Recommendations
This is where your suggested course of action will be outlined. Recommendations should
be cross-referenced to the conclusions, so that anyone reading the report can follow the
clear line of your arguments. There may be several courses of action, all of which must
be both clearly explained and realistic.
You should ultimately make it clear which recommendation you favour and why, and give
a plan of action outlining the priorities, likely timings and costs involved.
Recommended actions should be clearly stated and will often be accompanied by the
responsible person for completing the action. Recommendations should be numbered
and, where appropriate, priority should be indicated. They should always be practical and
realistic.
References
Where you have made use of other people's publications or data then you will need to
acknowledge this. Usually the references are put in alphabetical order by author
surname. The title, date of publication and the publisher involved should be included.
Appendices
There is often material which might be of use to others, but which would only confuse the
more casual reader. Tables of raw data, forms used for collection of data and statistical
calculations would come into this category.

Appropriate Writing Style


In order to be effective, it is important that reports are clear and easy to read. Paragraphs
should be short. It has been suggested that for successful business communications, the ideal
paragraph length is between six and eight lines.
One useful technique for conveying meaning quickly and making a document easy to read is
called signposting. This is where you deliberately aim to get to the point of the paragraph as
quickly as possible. For example, take the following sentence, which might open a paragraph:
In response to many enquiries, and following extensive discussions, we have decided to
introduce the new system in January.
The important part of the message - the introduction of the system - is right at the end of the
sentence. Far better to signpost as follows:
The new system will be introduced in January. This decision has been taken following
many enquiries and extensive discussions.
Signposting is effective because when the reader first looks at a piece of writing, he often
skims over the opening lines of each paragraph. In this way it is possible to get the meaning
across much more quickly.
Writing Concisely
There are seven basic rules (the seven Cs) that will help you convey messages successfully:
Be Clear
If the message is ambiguous or otherwise unclear, then the report itself will be a waste of
time and effort. Careful thought needs to be given to the composition of the report, so
that the ideas are ordered and the words and phrases used are clear in expression and
meaning. This may mean defining particular technical terms or lesser known concepts or

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procedures. Short, simple, structured sentences help, as does the use of headings. One
problem often encountered is the need to refer to other documents (or, at least, extracts
from them) or to background information. The inclusion of such material in the main
body of a report can be extremely confusing. If it is necessary to supply extra detailed
information to support a point, this is best placed in an appendix at the back of the report.
This ensures that the recipient focuses on the central messages of the report and does
not become distracted by too much extraneous detail.
Be Concise
Sometimes it will be necessary to spend time explaining a particularly important issue, but
brevity - compatible with the complexity of the information being conveyed - will help to
get the message home. This does not mean that you should cut corners in conveying the
information. It simply means that you should give careful thought to the most effective
and most economical way in which you can express your ideas.
Using over-complicated language to make yourself sound important should be avoided.
Be Correct
In most business reports, accuracy is of paramount importance. The implications of
inaccuracies can be very serious indeed, particularly when recorded in official documents.
It is, therefore, vital that all facts and figures should be checked. Also, do not lose sight
of the need to check the text for errors, especially in figures.
Be Courteous
In any form of communication, it pays to consider it as a personal address to the
recipient(s). This applies to communication across the board to customers or clients, to
colleagues, or to subordinates alike. Tone conveys much about the organisation, and
perhaps about you as an individual, and this can have a great influence on future
relationships. Therefore, in trying to be brief, do not be curt. Be polite and use
appropriate language.
Be Complete
It can be very frustrating to be on the receiving end of a report perhaps one which you
have been awaiting with some concern - only to find that it gives only half the picture, or
half the answers to your questions! It is important, therefore, to ensure that you deal
with each piece of information fully.
There may, of course, be occasions when it is impossible to give a complete answer - for
example, if you are awaiting information yourself. If this is the case, you need to state
that clearly, so that the recipient knows when and how to expect a full response.
Being complete may mean going beyond what were your original terms of reference for
the report. Other information may need to be brought in, in order for the complete
picture to be presented.
Be Consistent
The flow of language is considerably aided by consistency in its use, such as standardising
the tense used, and sticking to a particular style and tone throughout.
If the organisation has a particular house-style for documents, this can limit choice, but
you still need to be consistent.

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Be Convincing
This last point is often overlooked. It is very important to show confidence and
commitment in what you communicate, even though there may be times when you do not
actually have full confidence in what you have to do at work. Doubt, ambiguity and
vagueness come through very clearly in all forms of communication. Messages need to be
conveyed with conviction or they will not be taken seriously.
The Use of Plain English
The English language has immense vigour, range and vitality. It owes these qualities largely to
its great flexibility since, as an instrument of communication, it has far fewer rules and
patterns than most other European languages, including French and German. However, an
inevitable side-effect of this flexibility is that it can become vague or ambiguous unless used
carefully.
The writer, George Orwell, in an essay called Politics and the English Language, gave six
essential rules for precision in language, which you should constantly bear in mind:
Never use a metaphor (e.g. a lion of a man, a dream of a car) or a simile (e.g. as brave
as a lion, it goes like a dream) which you are used to reading in print. It could become
a clich, and if you gave it a bit more thought you could probably come up with a better
description.
Never use a long word where a short one will do.
If you can leave a word out, do so.
Never use a foreign word, a scientific word, jargon or a phrase where a simple, everyday
English equivalent will give the same meaning.
Never use the passive where you can use the active.
Break any of these rules rather than say something which is downright barbarous.
Choice, Economy and Simplicity of Words
The effectiveness of the message conveyed in a report will be largely dependent on the
individual words selected to reflect your meaning.
There are a number of basic rules to use in your choice of words:
Avoid colloquial language and slang.
Avoid clichs.
Avoid redundant expressions (e.g. at this moment in time).
Avoid jargon.
However, where you are writing as a specialist to a layman (for example, when explaining
a legal aspect of health and safety to a manager), you may need to use technical terms.
Always be careful to explain these when you first use them, or translate the terms into
ordinary language.
Avoid discriminatory language.

Reviewing the Report


Critical analysis or review involves developing an analytical stance towards information, and
the way in which it is presented.

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Critical thinking requires both careful observation and the capability to differentiate and
analyse information, to identify and distinguish between its components and their attributes,
and to identify assumptions, reasoning, and any patterns and relationships which are evident.
The word analysis means to break down an argument into simpler elements, such as
assumptions, evidence, logic, and conclusions; whereas critical means to subject each of the
elements separated out by the analysis to rigorous scrutiny.
Being critical does not mean that you simply do not like a particular viewpoint; critical analysis
may well come out in support of a given argument. What it does mean is that we have to look
at the assumptions, evidence and logic of an argument to see if the three elements fit together
and reinforce the central conclusions presented.
Therefore, it is always easier to apply critical analysis to somebody elses report rather than
your own.

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Issues Relating to Report Distribution


Means of Publishing
Reports may be made available in hard copy (paper), electronically or both, depending on the
recipients, their location and their access to electronic facilities.
Electronic distribution of reports may have the advantage of speed and convenience from the
issuers point of view, but depends on the receiver being in a position to respond to the
transmission with the necessary degree of urgency. There is always a danger that important
matters will be lost sight of in a mass of electronic communications.
Distribution in paper format may require the use of postal systems, both internal and external,
with the possibility of delay in receipt and even actual loss. There is also the expense of
printing, filling envelopes and franking.
From the point of view of the reader, it may be preferable to have a paper copy for ease of
reading, particularly if the report is lengthy. On the other hand, for short reports, reading an
electronic copy may be a very effective means of coming to terms quickly with the contents.
Effective Distribution
The circulation list is a list of people who are entitled to see a report. It will generally be
prefaced by a sentence such as:
This report is to be seen only by the following staff members.
To ensure that everyone who needs to see a report receives a copy, the circulation list should
be carefully drawn up to include all those individuals who require access to it and, equally
importantly, omitting the names of those who do not need the information.
Some reports will be confidential in nature, so that only certain people will be permitted to see
them. This applies in particular to reports concerned with possible future developments of a
company, which should not fall into the hands of professional rivals. Confidentiality is also
important for reports covering staffing or confidential data about individual employees.
Safety professionals should be careful about producing too many confidential reports. Even if
the information they contain is quite harmless, confidentiality can easily be seen as secrecy,
which creates mistrust in a workforce.
No-one likes to think that secret records are being kept about their performance or secret
plans being made which may affect their livelihood. Consequently, you should always take
pains to make clear to staff why a document is confidential, and also endeavour to make only
a very small number of such documents unavailable to staff.
Document Control
Much of the information handled by businesses and other organisations may be regarded as
sensitive, in that it could be useful to a competitor.
In order to prevent such information being available to the wrong people, it is often kept on a
need-to-know basis. Knowledge is power and many managers use the need-to-know
principle in order to hang on to information which should be shared, so that their own position,
as they see it, is enhanced. Now, there is nothing new about this behaviour - in Ancient Egypt
the Nile Priests hid the calendar in a basement so that they would be the only ones to know
when the river would rise - but it must be guarded against.

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BSC International Diploma Element 3B | Developing the Business Case for Health and Safety

In order to keep sensitive information secure, most organisations adopt a password system,
especially where the information is stored in a computerised system.
Other methods of protection include:
A log of access, containing user identification and times of ingress and egress.
Hierarchical access, where access is available only to those parts of a system necessary
for a particular job task.

Distributing Changes
An important aspect of the distribution of documents, including reports, is the facility to make
changes to them. If amendments are required to a document that has already been issued,
then it is necessary either to recall the document and to issue a replacement, or to prepare an
amendment sheet from which those who have received the document can alter it themselves
to the new version. Either way, it is essential to have retained a record of all those who
received copies of the document, so that the revised information can be forwarded to them.

Archive Copies
Reports should be stored in the manner most suited to the type of information they contain,
and in such a way that they can be accessed and retrieved easily and quickly when needed.
An important aspect of records management is an efficient follow-up system, which indicates
when a particular record will be needed at a later date. There are various ways in which this
may be carried out depending on the physical nature of the information. Writing a note on the
relevant file may be suitable if it is a hard copy, or placing it together with other related
records in a particular location may suffice. Another example of a follow-up system consists of
small pieces of card on which the date when the record will next be needed is written,
together with the relevant reference number of the record. These slips are then passed to the
person managing the records, who keeps them in a filing system. Each day the slips for that
date are removed from the file and the relevant records are retrieved and sent to the person
needing them.
Another important aspect of records is a satisfactory method for ensuring that only necessary
records are retained. In many organisations, records are kept indefinitely as no-one will
accept responsibility for throwing anything away.
In order to avoid such situations arising, it is necessary to have a proper retention system for
dealing with non-active records. The first thing to decide is how long each type of information
needs to be kept. In the case of some health and safety information, there will be a legal
requirement. Even electronic storage methods have limits to their capacity, so it is still
important to ensure that no unnecessary information is being filed in any form.
Rules for maintaining a sensible retention system include:
Copies to be retained only in essential areas.
A priority code worked out for retention times, e.g. three years for Category A, five years
for Category B (and so on) and strictly adhered to.
Constant vigilance to maintain the system.

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BSC International Diploma | Unit 3

Element 3B: Developing the Business Case for Health and


Safety

C O N T E N T S

Study Unit Title Page

3B10 Presenting the Business Case to Senior Management

KEY ELEMENTS OF AN EFFECTIVE PRESENTATION............................................................................................. 3


KEY PRESENTATION ELEMENTS................................................................................................................................... 3
UNDERSTANDING THE CONTEXT ................................................................................................................................. 4
THE SIX PS OF PRESENTATIONS ................................................................................................................................. 4
DEVELOPING THE PRESENTATION OF THE BUSINESS CASE ............................................................................. 8
THE PASS MODEL ................................................................................................................................................. 8
UNDERSTANDING THE TOPIC ................................................................................................................................... 10
STRUCTURING YOUR MATERIAL ................................................................................................................................ 10
USING EXAMPLES FOR CLARITY................................................................................................................................. 12
INFLUENCING THE RIGHT PEOPLE.............................................................................................................................. 12
CONSIDER YOUR RESOURCE REQUIREMENTS ................................................................................................................ 16
DELIVERING THE PRESENTATION .................................................................................................................... 20
COMMUNICATING EFFECTIVELY ................................................................................................................................ 20
MAKING AND USING NOTES .................................................................................................................................... 21
BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

BSC International Diploma | Unit 3

Element 3B | Developing the Business Case for Health and


Safety

Study Unit 3B10 | Presenting the Business Case to Senior


Management

Learning Outcome
When you have worked through this Study Unit, you will be able to:

Present a persuasive business case to senior management.

Unit 10:

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Key Elements of an Effective Presentation


Presenting information, proposals or ideas to someone else should be easy. After all, you just
have to talk to them, reach agreement and take appropriate action. If only it were that
simple! We have seen earlier that there are many barriers to effective communication and the
most important one is ourselves. We often assume that because we understand the
importance/relevance of our plans or proposals, then so too does everyone else. We forget to
introduce the stages or processes of our thinking which would illustrate how we reached the
conclusions we are presenting. We get bogged down in a mass of detail, which disguises the
simplicity of an idea. Sometimes we are overawed by our audience, or lack commitment in our
ideas or judgment.
In order to present ourselves and our information effectively, we must show evidence of what
might be termed the six Ps of presentation:
Planning.
Purpose.
Political sensitivity.
Personal commitment.
Personal communication skills (ability to persuade).
Polish.
We shall examine them in detail shortly, but first we shall look at some of the key elements of
making a presentation and the importance of understanding the context.
Key Presentation Elements
The main elements which make up an effective presentation are summarised in the list below.
You should consider this as a checklist to be directly and carefully addressed when planning
the delivery of any presentation:
Understanding the difference between written and spoken communications.
Oral communication skills (style, delivery, rapport).
Using non-verbal techniques.
Understanding your audiences requirements.
The ability to interact with an audience.
Preparation and planning.
Knowing your subject.
Presenting enough, but not too much, information/data.
Careful selection of information/data.
Summarising salient points.
Using appropriate visual aids.
Timing.
Reflecting corporate objectives accurately.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Working in a team with senior management.


We are concerned here with illustrating these skills and how you can make your presentations
more effective by paying particular attention to them.

Understanding the Context


Not only does the size of the audience, the subject matter, timescale or location vary from
presentation to presentation, but also the purpose (which determines those factors) will vary
enormously. The key to making a successful presentation is understanding this context and
you must ask yourself:
What is the purpose?
Whom is it for?
What is my role in this?
Who are the audience?
How will it be judged? By whom?
Are there any specific requirements/criteria which have to be met?
The context will determine how you approach the planning, design and execution of your
presentation. Therefore, it will not always be appropriate to use audio-visual aids. Your status
as a health and safety professional will vary in different situations and this will affect how the
audience perceives you and the validity of your arguments/presentation. The degree of
predictability of how the presentation will go may also vary with the context; for example, if
you are presenting specific information, you will have to be prepared for non-scripted or
apparently unrelated questions/requirements from your audience.
When presenting material to senior management, your audience could range from one to
perhaps six persons. The information you give must be relevant, factual and accurate. You
should present supporting data for any suppositions that you make and accept criticism calmly.

The Six Ps of Presentations


Planning
Being well prepared for a presentation affects how the audience perceives you and how
confident you feel about your presentation. It will result in your using any technical equipment
more effectively and in your being able to react quickly and accurately to any questions posed
by the audience. Presenters who apparently think on their feet and engage in an almost
social interaction with their audience, usually do so as a result of very careful and detailed
planning.
So, what are the elements of a presentation which you are giving that require planning?
Background
You will need to know the location, the timing, and the position from which you will
be presenting (e.g. in a meeting room, etc.).
What technical equipment will be available to you?
What is your role, status and what is expected of you in this context?
Personal Preparation
Is it necessary to adopt a particular dress code?

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Are you physically prepared with relevant data as well as spare pens, etc.?
Do you need to rehearse in the chosen location to maximise your impact and to feel
comfortable with your surroundings?
The Presentation Itself
Does your argument follow a logical sequence?
Is the language clear enough and appropriate for your audience?
Have you researched all your data/information thoroughly? Are your facts really
facts or fiction?
Have you timed the length of your presentation?
Will your presentation be lively and varied or delivered in a dull monotone?
Will you make reference to the audience? (Ask questions, invite questions.)
Do you understand what you are presenting?
Have you considered all the potential implications or perceptions that there may be to
your material? This will ensure that you can respond to any criticism or query
adequately as opposed to defensively.
Are any visual aids produced easily visible, relevant and properly produced?
Check who will be available to offer technical support if necessary.
The planning should allow you to take control of your presentation.
Purpose
The first element of the planning stage is concerned with identifying the purpose of the
presentation being given and your role in fulfilling it.
Clearly the purpose varies from one presentation to another, but in every case they are a
medium for corporate strategy, objectives or ideas to be revealed, discussed and
communicated. The purpose of a presentation to senior management on health and safety is
likely to be to generate support for an idea or proposal and/or to establish the presenter as the
expert on the subject.

Political Sensitivity
Why political sensitivity? Quite simply, presenters must be aware of the potential impact and
ramifications of the content of their presentations. Some issues are of political sensitivity in
the largest sense (e.g. nuclear waste). In other instances there could be internal politics which
should be considered (e.g. reallocating workloads from one department to another). Examples
include:
Presentations which are politically sensitive and must take account of legislation or
political change in the external sense (e.g. new processes for food production, chemical
emissions).
Presentations which in their planning and execution have to reflect sensitivity to internal
political issues.
Personal Commitment
If a presenter has no interest in the planning, writing or presenting of the material then the
presentation will be a disaster.

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However, if the presenter has too great a commitment to the subject matter, he may be unable
to see the potential pitfalls or problems, and appear to be over zealous and of the preaching
type.
Too great a personal involvement in the presentation and your role can result in an excess of
nerves and overplanning which destroys the impact of the presentation.
Personal Communication Skills
It is extremely important to be able to establish a rapport with your audience. You should
make sure that your physical appearance, body language and style of presentation contribute
to, rather than detract from, what you are trying to communicate.
The following tips may come in useful:
Wear clothes which are smart (and clean) but in which you feel comfortable. Avoid being
fussily dressed or too formal.
Try to control your nerves and the general nervous habits which we all have, such as
fiddling with pens, scratching, etc.
Use the space you have available to you; move around it so the audience have to follow
you and stay attentive.
Look directly at your audience, not at your notes, the floor or the ceiling. If you are not
comfortable looking people in the eye, look at the space between their eyebrows. This
gives the appearance that you are looking directly at them.
Body language is very important, as this affects the relationship you have with the audience.
You should adopt an open stance and style which engages with the audience, rather than
distances you from them. You must also, as far as nerves may permit, be as natural as
possible.
Depending on the particular situation (formality, size of audience, size of room, etc.), you may
be able to make a decision about whether you should stand or sit to make your presentation.
Whichever way you do it, do not hide yourself away behind a desk or lectern, or feel that you
have to remain motionless, or in the same position throughout the presentation. A certain
amount of movement will be more natural. For example, if you are using a lectern, it is quite
acceptable to move away from it, and indeed, such movement may help to engage the
audience.
If you are the sort of person who would naturally use your hands as you express yourself, feel
free to do so, but beware of over-expansive gestures, as these will detract from what you are
saying.
It is important to maintain eye contact with the audience as a whole. This helps to show
interest in, and engagement with, your audience. Let your eyes move over the audience and
avoid fixing your gaze on one particular individual. This is where you will see the importance
of using only cue cards (see later) rather than a full script, as you will be able to glance at your
notes without losing the impact of eye contact.
Eye contact is also important because you should all the time be watching for feedback from
the audience, and assessing peoples level of concentration. Try to vary the intensity of your
delivery to allow individuals to refocus.
In using any visual aids, it is important to remember to maintain contact with your audience,
e.g. as you write on a whiteboard. Do not turn your back for too long, and never speak
without turning to face the front.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Polish
This is the most difficult element to achieve; it rarely comes naturally and is usually a result of
practice, rehearsal and experience. A truly polished presenter can attain professionalism with
friendliness. Dont mistake being polished for being slick or over-rehearsed.
Even if you have to give the same information to different audiences, vary your presentation.
Remember to present the identified benefits to each particular audience. Avoid clumsy
phrasing, jargon or rambling.
It is worth looking at news bulletins to see how professional presenters use their material and
respond to the unexpected. Live morning shows are an even greater test of presenters and
reflect polish to varying degrees.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Developing the Presentation of the Business Case


Presentation of the business case for health and safety to senior management is the
culmination of all the effort that has been put into the project. It is no good conducting the
best research ever, only to discover that too little time has been given to considering how you
will present the work in a way that senior management will appreciate. Poor planning at this
vital stage can leave senior managers feeling that they have employed the wrong person.
They do not have all day to hear what you have to say. Only an hour or two may be allocated
to the presentation and questions. The essence of the work, and your findings, have to be
delivered in this time. Get it wrong and you will appear to be ineffectual or, worse still,
incompetent.

The PASS Model


An alternative approach to the 6 Ps model outlined earlier is to adopt the simple P.A.S.S.
model for effective presentations.
The PASS model reminds you to consider your purpose, your audience, your structure and
your style. It is important that your purpose, structure and style actually meet the
requirements of your audience in order to ensure that the message stands a good chance of
being delivered, avoiding where possible all possible elements of distortion.
Let us now look at how PASS actually works in terms of planning a presentation.
Purpose
Every presentation has a purpose and the purpose will be driven by a range of objectives that
have highlighted the need for direct forms of communication to the receiver.
Typical purposes of presentations to senior management in the context of health and safety
include:
Clarification of issues.
Motivating people to purchase.
Persuading people.
Allaying fears and concerns.
Introducing new concepts.
Introducing change.
Audience
As a presenter it is important, prior to the presentation, to gain a good understanding of the
composition of your audience and to have good background knowledge as to who they are.
Targeting them will also enable you to ensure that your presentation is firmly structured and
styled in order to maximise the potential of the presentation message being received.
Structure
By now you will have established the exact purpose of your presentation and the overall
objectives that need to be achieved as a result of the presentation taking place. It is likely
that the purpose and objectives will play a leading role in helping you to establish a logical
structure, which will ensure that the audience receives the message and that the presentation
objectives are achieved.

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Every presentation should have a beginning, middle and end, and these are useful points to
remember when preparing for a presentation.
Always give a clear introduction telling them the objectives of the presentation, the basis of the
content of the information and perhaps also the timing of the presentation. The more the
audience know what to expect, the better they will be able to follow your presentation and
relate to the subject matter.
In the middle part of the presentation, you should tell them all they need to know in terms of
the content of the presentation. Provide them with all the information that they need to make
informed decisions about health and safety.
Ultimately, tell them what you have already told them, i.e. summarise all key points.
Style
As with the structure of the presentation, the style will need to match the purpose and
expectations of senior managers. Knowing who your audience is should give you a head start
in terms of identifying an approach that will engage your listeners in a positive way.
You should consider whether your presentation should be formal or informal, injected with
humour or very much keeping to the point. Of course, the complexity of the subject matter
will determine to a degree the level of formality required, as will the make-up of the audience.
A further consideration relating to structure and style is how you can most effectively
communicate your message. It is unlikely that you can communicate anything effectively
without some aids or support materials. Therefore, as a professional presenter, you must look
for ways of enhancing your presentation in order to get the best out of it. Let us look at a
range of different methods to support this. Remember, presentations are a combination of
verbal, non-verbal and support materials, and it is this mix that will enable you to be most
effective.
Be fully aware of the purpose and objectives of the presentation.
Know your audience.
Use positive gestures smiles, hand movements.
Control the use of your voice tone and characteristics.
Use imagery to create a picture that will enable the listener to focus on what you are
saying.
Control the flow of information and do not give the audience too much, avoiding
information overload.
Look the part be well dressed and well groomed.
Have a script available as support so that you can remember what to say and when to say
it.
Ensure that you are fully up to speed on the context and content of the presentation,
avoiding confusion, contradictions and ambiguity.
Ensure the content is in a logical sequence.
Be prepared.
Be familiar with your environment.
Select appropriate visual aids and equipment.

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Most forms of presentation are not about delivering a formal, impersonal speech to an
audience. They are essentially an interaction between you as the presenter and the audience.
There may, or may not, be a degree of active participation by the audience, but try to think of
it as a conversation, albeit with a group of people and essentially one-way. Talk to them,
rather than lecture them.
It is important to think about your audience in establishing the tone and style of speech that is
appropriate. The key elements are the size of the audience, the degree of formality required
for the occasion, and the size, layout and acoustics of the room. You must speak clearly and
avoid rushing things. If you have planned it correctly, you should have time to make all your
points without steaming through it so fast that the audience has difficulty following either the
arguments or the speech itself. Often, nerves will tend to make you speak faster than normal,
so be quite deliberate in adjusting to an appropriate pace.
If you are using visual aids, allow your audience time to assimilate them. Dont introduce key
points whilst they are studying one of your highly attractive OHP transparencies. Talk them
through anything you show them, as well as using it as a reference point to develop your
argument further.

Understanding the Topic


A large part of the success of the case that you present will depend on your ability to identify
the significant factors which underpin it.
In oral communication generally, it is essential to know your stuff, as you cannot look it up as
you go along. It all has to be at your fingertips, or more precisely, on the tip of your tongue.
This means that you have to research the topic thoroughly and gather as much information as
possible about it. Whilst you obviously have to focus on that which is directly relevant to your
objectives, it is good to get as wide a perspective about the subject as possible. This will help
you to deal with additional issues or alternative approaches which your audience might raise in
questions. Make sure, too, that your information is up-to-date.

Structuring Your Material


Focusing on the Core
If you have done your research thoroughly, you will undoubtedly have far too much material to
include in the presentation itself. You have to organise that material by:
Determining what should be used, such that you are able to cover all the objectives in the
time available.
Structuring the session and the material, so that the audience may be led effectively
through it in a way which enables them to meet the stated objectives.
One approach to organising a mass of material is to consider it under three categories:

could include

should include

must include

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Structuring Material
This concentrates attention on those elements which must be covered, i.e. those which are
key to meeting the objectives and will therefore form the core of the presentation. Anything
else is supplementary to the main points. This may be divided into those elements which
should or could be included:
Material which should be included is that which is supportive of your main points; it is
important material, but not essential and could be omitted without detracting from the
exposition, if there is not sufficient time.
Material which could be included is that which extends your central material into further
areas, not central to the main theme of the presentation. If there were unlimited time, it
would be good to include and it would add to the sum of information relevant to the
objectives. However, the objectives can be met without it.
The point of this exercise is to focus on the core. It is this core, not the supplementary
material, which must be organised to give the structure to the presentation, and it is far
easier when you have stripped the content down to the essentials. It is important not to let
detail get in the way of the overall structure.
It is better to have a well-rounded argument based around the core points of a presentation
than to try to include too much of the supporting detail.
Structuring, then, is the process of determining the main headings and subheadings within the
core. Do not have too many main headings or the overall focus of the presentation will
become dissipated. At the same time, do not have so few that each section is too large to
have a clear focus of its own.
Ordering your Points
When it comes to putting your points in order and beginning to structure your presentation,
you may find that there is an obvious natural order. This may be in order of importance, in
chronological order, in order of cause-and-effect, etc. If there is a natural order it is important
to follow it, as it will be the easiest format for your audience to follow. If no logical or natural
order is evident then you will have to create the simplest and clearest order that you can. Try
to arrange your points in a way that will flow from one to the next: perhaps pose a problem
and then provide the solution, or explain a need and then offer the answer.
Now add in the secondary points and begin to build the presentation. Do not write your
presentation out in full. Note the main points with brief support information and secondary
points. Note any examples you wish to include and write down phrases or points which link
the sections to ensure a clear and logical flow. These outline notes will then guide you
through your logical sequence of points, while allowing you the flexibility to alter your
language and speed, etc. to suit the reaction of your audience. By speaking off-the-cuff in
this way, your presentation will sound more convincing, enthusiastic and confident.
As we said earlier, the presentation should have a clear introduction, middle and conclusion.
The old maxim of Tell them what youre going to tell them, tell them and then tell them what

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youve told them stands true. The audiences attention is at its best at the very beginning of
your presentation and rises again when they hear that you are coming to an end. Your
introduction should preview your content, so that your audience can follow it more easily. Your
conclusion should highlight the main points that you have made, to consolidate the information
in their minds.
You may wish to write out your introduction and conclusion in full to ensure that they are clear
and that you dont miss anything. However, do not learn them word-for-word, as this will
sound wooden and lack-lustre. Attempt to absorb the outline and any specific phrases or
quotes that you want to use to illustrate your points and then deliver your piece with
spontaneity and enthusiasm.
Using examples for Clarity
It is always helpful to illustrate the points you make by providing examples, and during
presentations, examples provide a welcome opportunity to add life and colour to what may be
a dull subject. Any exemplification should be carefully researched and developed to ensure it
is accurate, relevant and supportive of your main themes. For example, this picture of
corroding drums of radioactive waste, which are glowing an eerie green, presents a powerful
image of the problems associated with the storage and handling of radioactive substances.
Depending on the type of presentation, the examples may have to be more or less detailed. In
some instances, such as the introduction of new working methods, you would provide detailed,
worked-through practical examples. If there are not appropriate real examples to draw upon,
it may be necessary to develop your own simulations. In other situations, for example during
a presentation on work-related sickness absence, you would want to include some general
facts and figures.
Anecdotes or short stories about real incidents are also particularly helpful in illustrating
practical implications or applications. Putting a humorous slant on them can be very effective
in adding life and colour to the presentation.

Influencing the Right People


Analysis of your audience gives you the first vital clues as to how your information should be
presented.
If you are not sure who the audience is, you need to take steps to find out.
To find out about your audience, you should look at the attendance list which is usually
produced for a formal event. This will certainly give an indication of the size of the audience
and may enable you to deduce information about their background and experience. There
may also be information about the audiences individual objectives in attending.
You should also consider past events of a similar nature. For example, finding out about a
particular group of senior managers or how the last such presentation went.
You may be able to obtain information about those you need to influence by:
Ascertaining who has been invited to attend the presentation ahead of the event. If
possible, try to find out about these people and their views in advance.
Consulting colleagues who have had dealings with those attending the presentation.
Doing some research to establish the needs of those attending, their priorities, their level
of understanding, etc.

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In any event, you are likely to find that some of those present will exercise more influence on
company decisions than others. The more background information you can obtain on the
senior managers concerned and their importance the better, as it will enable you to direct your
presentation towards those managers whom you particularly need to influence. Without their
agreement, you are unlikely to achieve your objectives.
Obtaining the Support of Key People
We are constantly communicating in business, but when we are engaged in formal
communication, it is especially important to set clear aims and objectives. These should be
derived essentially from analysis of your audience and their needs, in conjunction with your
intentions.
You must identify your audience and then decide on precisely what your objective is. If you
are unclear about what you hope to achieve by your communication, then it is likely that the
audience will also be confused.
What results are you hoping to achieve? Are you trying to persuade your audience to accept a
view they did not hold before, or to confirm something they already agree with? What do you
want them to do following your presentation? Will they need to pass on the information you
are supplying or is it for their own use?
Understanding the Audience
You should consider your audience carefully. As with all methods of communication, you must
start from the point which the audience is at. You will find it helpful to ask yourself the
following questions:
Who will make up the audience?
How big will the audience be?
What is the level of their existing knowledge and awareness of the subject?
At what level of complexity can you pitch your presentation?
What is the likely reaction to the presentation? Is it likely that there will be anxiety or
resistance to the subject matter, and can you get any ideas about the reasons for this?
What are the objectives of the audience likely to be? Whilst the needs of the audience
should not be allowed to dictate your overall aims, they will almost certainly influence the
specific objectives and the way in which the presentation will be delivered.
Consider whether senior management will be listening to you to learn something new, to be
persuaded of some truth, or to be reassured about a change that is occurring.
How informed are they about the subject? The level of understanding of the audience is of
great importance, so that you know the level at which to pitch your information. If you are too
technical for them they will lose interest, yet if you are too basic they may feel that you are
being patronising and stop listening.
Even people with whom you communicate regularly may not have the background or level of
knowledge you had assumed. Take time to find out.
You should always consider what your audience knows or is likely to know now. You can work
from this starting point, carrying them with you step-by-step through the various elements to
be covered. The aim is to develop your presentation in a logical fashion, starting from the
basics and developing complexity as you work through it. This ensures a coherent progression
to the whole, and helps to make your arguments persuasive.

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Structuring the presentation to work, step-by-step, through your subject, also helps to divide
the session into a number of chunks and provides natural break points. These allow both you
and your audience periodically to take stock of progress through the subject, and make it
easier for you to keep track of where you are.
Understanding the Pressures on the Audience
Remember that senior managers have many pressures on them in terms of matters requiring
their attention and their time. Their priorities will not necessarily be the same as yours. They
may be dealing with financial, staff or supplier problems. Complaints from dissatisfied
customers may be threatening the companys image. There may be outside pressures in the
form of legal action or demonstrations by environmental pressure groups. Managers may
simply be fire-fighting as they struggle to contain one crisis after another.
Whatever the current situation of the company, it will inevitably be the backdrop against which
your proposals in respect of health and safety matters are seen. The more you understand
how the company functions and the problems it faces, the more likely you are to be able to
present your proposals in a way that ties in with current concerns rather than competing with
them.
Appreciating the Requirements of the Audience
As we said earlier, understanding your audiences requirements is a key element of effective
presentations.
What are the objectives of senior managers?
What are their needs?
What concerns are they likely to have?
How informed are they on health and safety requirements?
You need to know what is expected of you in the context of the presentation and whether
there are any specific requirements or criteria that you must meet.
Remember to:
Be physically prepared with all the relevant data.
Use the PASS model purpose, structure and style must meet the requirements of the
audience.
Explain complex technical matters clearly.
Be up-to-date in your information.
Focus on the core material.
Avoid information overload.
Time the presentation accurately.
Be prepared for additional issues to be raised.
Be prepared for alternative approaches to be put forward.
Dealing with Questions
Oral communication is essentially a two-way process, so, while you will have a lot of one-way
presenting of information to do, do not lose track of the need for some degree of participation.

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At the end of the presentation, it is usual to invite the audience to ask questions. If you are
going to do this, you should ensure that you anticipate all possible questions, prepare
appropriate answers in advance, ensure that you can clarify any complex issues and,
importantly, listen to what the senior managers are asking and saying.
If you want managers to ask questions during your presentation, then you should invite them
to do so. If you have assessed your audience effectively when preparing your presentation,
you should have anticipated their questions and built them into your material. Should a
question be asked during your presentation, try to answer it quickly and get back to your
theme as soon as you can. It can be off-putting to the audience if you leave questions
unanswered until the end, as it can look as though you dont know the answer or are avoiding
the point raised.
Leaving questions until the end, when you can set some time aside for them, provides you
with more control over the running of the presentation, but it can be very uninvolving for the
audience at the time.
Taking questions as you go along, has the advantage of resolving any issues at the time they
arise and allows for a higher degree of audience involvement, but can be difficult to handle, as
it may throw out your timing or disrupt your planned order of dealing with topics. Do not be
afraid to cut short discussion and defer consideration of particular points to a later stage of the
presentation or the end.
Whichever method you use, you have to take control over it and explicitly state the way in
which you intend to handle questions in your introduction.
Do not ignore your audience. Very often they can make a valuable contribution to the
development of your presentation by contributing their own ideas. Obtaining their input at
certain points is a useful device for involving them, as well as bringing in the issues of real
concern to them. However, you must ensure you can keep control over what is said. It is easy
to get deflected from the central line of your presentation by the issues which may be raised.
If managers ask apparently unrelated questions, answer them with courtesy. There may be a
connection you are not aware of, or they may simply be taking advantage of the opportunity
to make use of your expertise.
Strengths and Weaknesses of the Presentation
It is very important to review your presentation before giving it, in order to reflect on the
strengths and weaknesses of the case you are making. You need to be able to emphasise the
strengths and minimise the weaknesses. Without strong arguments in favour of what you are
proposing, senior managers are unlikely to respond positively. Similarly, if you fail to spot
significant weaknesses in your argument, you are likely to find yourself confronted with these
during or after the presentation, again with unfavourable results.
Your presentation may have strengths in terms of pressing arguments for improvements in
health and safety provisions on account of legal requirements, accident records or public
opinion. You may be able to convince senior managers that changes in health and safety
arrangements will lead to increased productivity. Other strengths might be:
Improved employee morale.
Greater employee involvement and motivation.
More competent workers through training.
Less need for supervision.

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Less sickness absence.


Fewer accidents.
Above all, you may succeed in demonstrating to management that funds spent on health and
safety should be viewed as an investment rather than a cost.
On the other hand, the presentation of your case may be weakened by factors such as the
following:
Lack of suitable supporting statistics.
Anticipation of long-term rather than short-term results.
Demand for resources which the company is unable to supply.
An apparently satisfactory status quo.
Difficulty in explaining complex technical matters.
Substandard visual aids.
Inadequate presentation skills.
Above all, you may fail to relate health and safety to the companys core concerns and to show
a relationship between investment and return in the context of health and safety.
Consider your Resource Requirements
Equipment and Venue
Visual Aids
It can add interest and variety to a presentation if you use visual aids to help illustrate
points. Dont add visual aids for the sake of it only use them if they help to make a
point more clearly. Be sure to choose something which is suitable for the venue you are
using, e.g. showing a video on a 12 TV screen would be pointless and would detract from
what might otherwise have been a good presentation.
Microsoft PowerPoint has become the standard presentation software package, although
other packages exist. This tool can make the presentation much more interesting through
the use of colour, style, pictures, video clips, etc. Some of the problems with the
electronic slides are the same as existed for acetate-based presentations on overhead
slide projectors, namely too many bullet points and too much text leading to a feeling that
the slide is cluttered. Colour is also a potentially difficult area. While standard black text
on a white background is easily read, it is regarded as somewhat dated. Some
combinations do not really work, such as white background with yellow text. However,
some tones of blue with yellow text are quite effective, although you must consider
whether they suit the style of your presentations.
Some of the visual aids you might choose, in addition to the increasingly standard
Microsoft PowerPoint slide presentation package, would include:
Charts (pre-drawn or done on a flip chart as you talk).
Before/after pictures.
Video or film.
Blackboard.
Overhead projector.

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Props.
Slides.
Demonstrations.
Maps.
Handouts.
Flip charts.
Sound effects.
If you choose to use handouts, it is best to pass them round at the point in your
presentation where they become relevant. If they are handed out before you begin, they
will distract people and be read out of context. If you wish your audience to have read a
handout before the presentation, it is advisable, where possible, to send it out in advance
and request that people read it before they attend.
Whichever aids you choose to use, make sure that they are relevant and effective. Check
beforehand that any equipment is working, that your slides are in the right order, etc.
There is nothing more distracting than a badly used aid in the middle of a presentation.
Rehearsal
It is important to rehearse your presentation before you give it in front of your main
audience. This is necessary in order to:
Time how long it will run.
Allow you the opportunity to make changes if points seem jumbled.
Give you practice at using your aids.
Assess your delivery technique.
Learn the basic structure of your presentation and the way that the points link together.
Write these on small cards and number their order; use these cards as prompts to guide
you, but choose your words as you go along. This will sound far more honest and
convincing than learning the speech word-for-word and then stumbling through it or
reading from a script.
Rehearse out loud. If you can find a colleague with some knowledge of the subject to
listen to you, it will help. Your friend can tell you if your ideas are clear and whether you
sound convincing. Some people like to rehearse on tape so that they can listen to their
talk and identify any problem areas. If you can video yourself rehearsing, even better.
Watch out for any irritating or repetitious movements or speech patterns, such as
scratching your head, waving one hand in the air or constantly saying: You know,
OK or Now then, etc.
Varying the speed of delivery and volume and tone of your voice are useful tools in
speaking. By suddenly changing the speed at which you are speaking or by a sudden
drop or increase in volume, you can add emphasis to a point. Generally, you should
speak more slowly than in conversation and loud enough so that everyone can hear you.
If you find it a strain to make your voice heard, arrange for a microphone to be available
rather than attempting to shout your way through your presentation.
Part of your rehearsal should include a full practice with any visual or other aids you are
using. Do this in the venue where you are speaking, with the actual equipment that you

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will be using. Make sure you are familiar with any equipment and check that there are
back-up facilities (such as a spare bulb for the overhead projector, etc.) just in case.
Learning from Failures
Presentation Skills
The way in which you deliver your presentation will affect your success just as much as its
structure and content. Your personal appearance, body language, how you cope with
nerves and how you field questions or interruptions will all influence the way in which the
audience receives your message.
Your aim is to appear confident and knowledgeable with a clear purpose and a
professional approach. It is important to be in touch with your audience. Establish eye
contact with as many of them as you can and react to signals you receive from them. Are
they getting bored? Are people nodding or shaking their heads? Do the members of the
audience seem to be following the points you are making?
Remember that first impressions are very important. Make sure that you are dressed
appropriately and comfortably. Even if you are very nervous, try to look calm. Take your
time, take a deep breath and smile!
Take time to review your presentation skills and to learn from any mistakes you may have
made in the past.

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BSC International Diploma - Element 3B | Developing the Business Case for Health and Safety

Personal Communications Skills Assessment


On the following scale assess your own communication skills. Use feedback from others and
appraisals, etc., as well as your own assessment.
Very Good Good Adequate Below Poor
Average
Skill 5 4 3 2 1
As a listener
As a persuader
As an informer
How would you
evaluate your skills:
Using visual aids?
Interpreting body
language?
Using language?
Using body language?
Interpreting feedback?

Previous Experience
If you have given presentations to senior management before, either in this company or
in another, you will know to some extent what to expect. You will already have
experienced what it feels like to be put on the spot and to have to respond to senior
management concerns. You will have a good idea of your abilities in this respect and be
able to build on the experience that you have.
If anything went wrong on previous occasions, try to analyse why this happened and how
you can prevent it happening again.
Was your preparation sufficiently thorough?
Did you deliver what managers required?
Did you make a sufficient case for your proposals?
Did you anticipate management objections?
Had you thought through all the implications?
Whatever the shortcomings last time, learn from them and move on. Your increased
experience should enable you to present a more effective case next time.
If you are presenting a business case to management for the first time, try to get some
idea of the experience of colleagues or predecessors. What is managements track record
regarding the case for health and safety? How could you improve your chances of
success?

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Delivering the Presentation


Communicating Effectively
The way you deliver a presentation will be important - it doesnt matter how much work you
have put into the preparation, if your delivery is awkward or you cant be heard, then the
communication process will fail. Try to remember the following principles when delivering a
presentation.
Start Well
Start your presentation in an arresting and precise manner - experienced people have several
ways of beginning a formal presentation:
By using a joke.
By telling a story which seems quite irrelevant but then turns out to be related to the
subject.
By asking questions which they then attempt to answer in the presentation.
By saying what they would like to achieve in the time available.
Whatever opening you choose, make sure that it is clear in your mind before you begin. A
well-defined opening will help you a great deal in feeling confident and in establishing a
relationship with your audience.
You set the tone of the presentation by what you say in the first few minutes, so the keynote
has to be interest. This is generated by what you say and how you say it; so make it light,
introduce some humour if possible (for example, by using amusing anecdotes) and be positive.
Speak Clearly
Projecting your voice is not always easy, especially if you are nervous. Take deep, steady
breaths before you begin and use plenty of volume. Don't be afraid of talking too loud: it is
usual to be too quiet and the audience will respect someone with a firm, clear voice. Use short
sentences - this will prevent you from running out of breath in mid-sentence, which sounds
awkward and will make you more nervous.
Conclude Decisively
As you should begin in a clear and decisive manner, so you should make it absolutely clear
when you have finished, instead of coming to an end slowly and awkwardly. The whole of
your presentation should have been developing towards a conclusion or moment of climax, so
make it clear when this has arrived. Closing a presentation can be like closing a sale, so never
underestimate the importance of preparing for closure.
The conclusion of the presentation must be equally as positive as the introduction. The final
impression you make on the audience is often the one which they will carry away with them,
so make sure it is not weak.
You should summarise what you have covered in a succinct and interesting way. Again, this
can be helped if you can introduce a touch of humour. If you shared the presentations
objectives with the audience as part of the introduction, you can return to them as the basis
for the summary.

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Making and Using Notes


Very few speakers are able to remember everything they want to say at the time. Some notes
are essential to help you remember all your points and guide you through the presentation.
When we say notes, we mean notes - you do not have to produce a full script for the
presentation. There may be a temptation to write it all out verbatim, but this will only
encourage you to read the words out to your audience, rather than speak to them.
It is best to use cue cards, rather than sheaves of paper. These are small cards which simply
state the key points to be covered, that is main and subheadings, with a number of subsidiary
points underneath. Cards have the advantage of being small and easily handled, they do not
rustle if you are nervous and can be bound together to keep them in order.
The words on the cue cards should be written clearly and boldly, so they can be easily read
while you are standing up and speaking. The cards should be numbered to keep them in order
and to help you know where you are during the presentation. They can also be annotated to
show where you will use any visual aids. Colour coding can be used to identify different
elements or to separate topics.

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