The HSE Cost Iceberg

The HSE cost iceberg is a tool used to analyze and evaluate an organization's expenditures on health and safety measures. It helps identify and allocate costs across various safety aspects, pinpoint areas requiring additional investment, and assess the effectiveness of measures already implemented.

The cost iceberg consists of two main parts: visible and invisible. The visible part represents direct costs for equipment, training, insurance, and other HSE-related activities. The invisible part includes indirect costs, such as loss of productivity due to accidents, downtime, lawsuits, etc.

The visible portion of costs is relatively easy to forecast and include in the operating expense budget. The main line items are typically defined as:

• Salaries and social security contributions (HSE departments, responsible persons, engineering and technical staff, etc.)
• Medical services (medical examinations, on-site medical rooms, voluntary health insurance)
• Provision of PPE (personal and collective protective equipment)
• Training and briefings (including onboarding, internships, professional development)
• Workplace and equipment (tool kits, equipment maintenance, consumables, etc.)

The invisible part of costs is rarely included in the organization's budget. Depending on the volume of expenses, this hidden part of the iceberg can be divided into several categories:

1. Predictable expenses (current costs for routine hiring processes/routine legal department processes, excluding emergency costs):

• Litigation costs
• Costs for hiring and training new employees

2. Partially controllable (costs that can be forecasted when assessing financial risks and the economic efficiency of implementing specific safety measures)

• Fines
• Damage to equipment, raw materials, and finished products
• Loss of staff working time
• Decreased labor productivity
• Costs for maintaining reserve capacity

3. Reputational (virtually uncontrollable costs associated with the reputational consequences of risks to the company)

• Decline in corporate image
• Disruption of the psychological climate within the team

The purpose of the cost iceberg is to ensure efficient resource utilization and management of HSE-related risks. This tool helps organizations understand how significant these costs are and how they can be optimized. It also assists in developing strategies and plans to improve workplace safety and reduce health risks for employees.

Proper forecasting of HSE costs helps find the ideal balance between the measures taken and their economic benefits. Safety expenditures ensure the overall economic efficiency of the enterprise as a whole.