Managing Risk in Environment, Health & Safety Programs

Increased focus to comply with regulations and the need to manage risks is causing companies to adopt new strategies to streamline Environment, Health and Safety (EH&S) programs.

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Companies are looking for ways to reduce the cost of compliance, improve the safety of people, product and processes while at the same time surpass corporate goals around brand equity and shareholder value.

As new regulations evolve, internal and external stakeholders are increasingly putting their attention on sustainable business; the need to stay in compliance with regulations is at the top of the mind of these companies. The consequences of not being in compliance with EH&S regulations are drastic. It can result in penalties, fines, damage to the brand image, erosion of shareholder value, plant shutdowns, and, in some cases, even fatalities.

Aberdeen Group's latest research on Environment, Health & Safety showed that Best-in-Class companies are able to reduce energy consumption by 10 percent, realize 1 percent repeat accident rate, and 0.1 percent injury frequency rate compared to 0.5 percent increase in energy consumption, 11 percent repeat accident rate and 1.3 percent injury frequency rate for Laggard companies. Best-in-Class organizations have differentiated themselves by establishing a formalized EH&S program, providing long-term vision through executive leadership, and investing in technology to manage knowledge and performance across operations.

Compliance management

The research took a deeper look into compliance, and asked survey respondents what were the top drivers behind an organization's focus on compliance. All of the survey respondents identified the need to reduce the risk of non-compliance in operations as their top pressure (73 percent). An interesting trend was revealed while further analyzing this data. For the Best-in-Class, these leaders are concerned with the complexity of managing EH&S compliances across global operations and conforming to the compliance of customer mandates. When you are a large global manufacturer with hundreds, even thousands, of plants and distribution centers, you need to manage compliance in a consistent manner across different businesses, geographies and product lines.

On the other end of the spectrum, we see that the less mature organizations are more focused on cost. Laggards see that non-compliance directly impacts their bottom line and they want the pain to stop. Unfortunately, they haven't figured out how to stay in compliance with the regulations, and, more importantly, they haven't understood how this could be a competitive differentiator for them.

According to the report, "the ability to collect and store the massive amounts of data related to environment, health and safety, and the ability to provide that data in an effective fashion when needed for decision making as well as internal and external reporting, are critical factors in consistently complying with regulations, as well as reducing the overall risk to organizations."

Best-in-Class companies are found to be more likely to automate compliance to the regulations that are most critical for their organizations. Automating compliance will ensure that critical data is no longer collected and stored on multiple spreadsheets across multiple plants. An automated solution enables an organization to gain central insight, control and accountability into operational processes. This level of control contributes to the ability of these organizations to efficiently collect, report and audit their processes, generating greater consistency and predictability into how they manage their operations and manage compliance across the diversity of regulations.

Matthew Littlefield, matthew.littlefield@aberdeen.com, is Senior Research Analyst, and Mehul Shah,
mehul.shah@aberdeen.com, is Research Analyst, for Aberdeen Group Inc., in Boston. 

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