For many years, manufacturers were, to a degree, allowed to “walk away” from what they produced. The Latin phrase “Caveat Emptor,” or “Buyer Beware,” was the understood, unvoiced, and undocumented contract between seller and buyer. How could manufacturers, after all, control what end-users did with their products after they left their possession?
Today, responsibility is spread more evenly across all stakeholders in the manufacturing supply chain. But “exposure” to risk is still difficult to quantify and, to many, it appears needlessly open-ended. To the insurance industry, though, no risk is completely unmanageable. It’s only a matter of degree.
Manage risk by documenting risk
“What can’t be measured, can’t be managed” has a similar corollary: “What isn’t documented, won’t be managed.” This is most critical with managing risk and liability.
The central methodology to manage all sources of manufacturing liability begins with Documented Risk Assessments. These are thorough processes that should begin in the design phase of any product or piece of machinery. They should be repeated at regularly scheduled intervals and diligently performed to discover any new modifications or new behaviors. Training practices, safety standards, and regulations compliance should be scrutinized closely—and periodically.
George Forrester, president of AHT Inc. insurance consultants, advises ritualizing manageable Documented Risk Assessments and forming strategic partnerships. “Always make your risk management goals and safety processes known to the manufacturer even before the purchase transaction and installation,” he says. “By including the manufacturer in the problem-solving process you will greatly decrease the likelihood of unintended consequences.”
Insurance underwriters armed with Documented Risk Assessments can provide more competitive pricing for their insurance policies. When imagining a worst-case scenario, insurers want to both imagine how a company’s exposure can be reduced before an incident, and how to defend the companies, machines, and practices against negligence claims after the fact. Documentation is the most effective means to these ends.
In the end, as a company or as a person, you look for the best ways to:
- Manage actual risk of injuries
- Document existing sources of risk
- Identify possible sources of new risk
- Distribute risk among partners
- Protect against financial liability
- Limit exposure to litigation and liability
All of these goals are also the goals of Documented Risk Assessments. But these are only the tangible benefits of maintaining a risk assessment program. Intangible benefits, such as company reputation and employee morale, may be just as valuable.
New hierarchies of safety
Has the “hierarchy of safety” changed? Only a few decades ago, it seemed so simple:
- Design out the hazard
- Guard the hazard
- Warn about the hazard
- Instruct on ways to avoid the hazard
- Use personal protective equipment
Today, it’s not so straightforward. A new generation of professionals has modernized the world of safety so completely that today’s workforce, including many who perform safety functions, no longer know the lingo. The modern “hierarchy of safety,” which lies on top of the old, is:
- Identify the hazard
- Estimate the risk potential
- Evaluate the risk potential
- Reduce the risk potential to an acceptable level
- Document the entire process
While the old safety hierarchy hasn’t disappeared entirely, the newer hierarchy consistently preaches the need for task-based risk assessments and thorough documentation. This message is delivered in such a way that it pertains to new machinery as well as legacy machinery currently in the field.
Risk can be shared
Many fear the unknown because it hasn’t been named, quantified, planned for, or documented. So the only way to conquer fear—and risk—is with knowledge, a strategy, and documentation.
The implementation of risk management and safety programs and procedures is increasingly spreading beyond company walls to become a partnership among vendors, suppliers, customers, and contractors all working towards the same goal. “Many businesses are inextricably linked to one another in supplying products and services,” says Forrester. “Shouldn’t the ‘blame,’ or liability, be shared?”
These partnerships have led to increased communication on risk and safety issues wherever they arise. Sharing the responsibility of reducing risk and ensuring safety is positively impacting the packaging industry and giving companies that adopt this methodology a step on their competition.
