Health and safety a reputational risk

The study, conducted on behalf of the Health and Safety Executive (HSE) examined the growing influence 'Corporate Social Responsibility' (CSR) on business organisations, and whether occupational safety and health (OSH) was seen as an important factor on the CSR agenda.

Research and consultancy firms Technopolis and Emerging Markets Economics, the authors of the report, claimed that health and safety issues formed an "integral part" of CSR. This, they said, was confirmed by its inclusion in all of the major measurement and reporting guidelines and tools developed for CSR.

It added that CSR was generally seen as requiring businesses to go beyond compliance, something that was in keeping with current Health and Safety Commission (HSC) and HSE strategy.

However, to capitalise on the growing influence of CSR on business organisations the HSE needed to highlight how failings in health and safety could considerably damage the reputation of firms among investors, employees and the general public.

"HSC/E must demonstrate that OHS is a reputational risk issue for all types of business," said the report. "For the reputational risk to be material, it needs to be shown that companies that fail to adequately address occupational safety and health are in danger of losing public trust with a consequent loss of profit and shareholder value.

The report added: "Public awareness is key to making OHS a material issue for reputational risk."

Enough disclosure?

The study highlighted surveys carried out by the Association of British Insurers (ABI) and Business in the Community (BITC), which showed a "strong awareness of CSR issues" particularly environmental concerns amongst large businesses.

The surveys also revealed widespread disclosure of performance on CSR issues, including OHS, although disclosure tailed off rapidly as the size of business decreased.

"Disclosure is greatest amongst businesses operating in industries where occupational safety is an issue, particularly those whose activities affect the safety of the public," the report said. "This reflects the potential effect of OHS on the reputation of these businesses.

A bigger influence for smaller businesses was their employees and customers. Such businesses were influenced far less by CSR organisations and the Socially Responsible Investment (SRI) movement, according to the report.

From this point of view it recommended that OHS be given greater prominence by employees and those who represent them, not only in terms of enforcement, but as a reputational risk.

Significant issue

The results of a global survey published last week revealed that businesses considered reputational risk as the most significant issue currently facing them.

The 'Corporate Risk Barometer' survey from the Economist Intelligence Unit quizzed risk managers from large organisations across the world. Regulatory risks were seen as the second most significant issue.

"The focus for risk managers is shifting from financial risk to less understood areas, with reputational and regulatory issues topping their list of priorities," said Daniel Franklin, editorial director of the Economist Intelligence Unit.

The third most significant threat cited by executives was IT network risk, which encompasses network security breaches and IT systems failure.