Tappura et al. WOS conference 2012

1. The 6th International Conference Towards
Safety through Advanced Solutions
WOS2012, September 11-14, Sopot, Poland
A Management Accounting
Perspective on Safety
Sari Tappura
M. Sc. (Eng.), Researcher
Center for Safety Management and Engineering
Industrial Management
sari.tappura (at) tut.fi

2. Safety-related MA
• Cost-based calculations dominate practice
– Cost per injury
– Total cost of accidents
• Focus should also be on non-financial
information, like safety improvement,
strategic safety objectives, and employee
relations.

3. Safety-related investment
calculations
• There is a need for cost-benefit evaluation
methods, including the non-financial benefits
and value that is created though preventing
accidents.
• Efficiency of the safety improvements, e.g.
productivity improvements, product quality,
customer satisfaction and the value of safety
goodwill should be evaluated.

4. MA methods
• Simple methods are sufficient and calculating the time
value of money is not necessary if:
– payback period is short or
– uncertainty of initial values (costs or benefits) is great
• Payback period and benefit-to-costs ratio give estimations
precise enough.
• Profitability of OHS investment is strongly connected to
indirect cost and benefits.
• The direct costs cover only part, often a minor part, of total
costs and benefits.
• Avoidance of medical care costs and changes in
productivity, product quality or customer satisfaction cannot
easily be proven

5. Cost-benefit evaluation
• Benefits can be estimated only and
uncertainty is quite high.
• The accuracy of an estimation is important
because the productivity change is typically
the most important single factor when
defining cost-benefit ratio.
• Safety intervention cannot be justified without
enhancement in productivity.

6. Conclusions 1/2
• Aligning the safety perspective and business
strategy provides value for organisations when
they make interventions and investments.
• Balanced Scorecard approach is suitable tool,
especially when safety is vital for the business.
However, new (intermediate) indicators should
be included.
• Tradition of utilising methods of MA is not well-
established in safety-related decision making.

7. Conclusions 2/2
• There is call for broader perspective in safety
intervention evaluation (incl. social costs) as well
as non-monetary outcomes for industrial and
public relation reasons.
• In practice it is not necessary to know exact
value of intervention. It is more important to
know if the effect is positive or negative.

8. Reference
• Tappura, S., Sievänen, M., Jussila, A., Heikkilä,
J. & Nenonen, N. 2012. A management
accounting perspective on safety. Proceedings
of the 6th International Conference Towards
Safety through Advanced Solutions WOS2012,
September 11-14, Sopot, Poland. Central
Institute for Labour Protection – National
Research Institute Warsaw. 15 p.
Sari Tappura 8