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News & Insights
Safety in business is crucial, regardless of an organization’s size or industry. Without the proper safety measures in place, a company puts its employees, customers, revenue and reputation in danger. Especially in today’s business world, with COVID-19 concerns and more employees working remotely than ever before, ensuring safety at the workplace for the workforce, as well as for data, is more important than ever.
As part of an ongoing Focus Forum discussion series, Pacific Business News brought together three leaders to discuss physical and digital safety in the workplace.
Warren Ando, director of safety and risk management at HEMIC; Tracy Lawson, president and founder of Lawson & Associates and Steve LaClair, director of product management for Spectrum Enterprise, came together on June 4 to share their insights on the importance of cultivating a culture of safety, what companies can do to improve their cyber security and the long-term consequences of ignoring workplace and data safety.
This discussion was moderated by Tammy Mencel, publisher and market president of Pacific Business News.
Tammy Mencel: Thank you all for participating in this important Focus Forum. When thinking about safety in business, what does that mean to you, your company and the services that you provide?
Warren Ando: Taking care of Hawai‘i’s businesses and workers is paramount to our company. It’s our mission. It’s in our logo. It’s our tagline.
While HEMIC has been known for providing workers’ comp insurance and excellent customer service, we have grown to also include different lines of coverage through our subsidiary HIMI, as well as temporary disability insurance though our new subsidiary EPIC.
We also offer cyber risk assessments to assist our policyholders with understanding their cyber exposures as well as recommendations for a remediation plan. Improving workplace safety is a foundation of our company and a cornerstone of our operation.
Our safety services, as well as our collaborative efforts between departments, are available to all policyholders with the goal of strengthening their operations and maximizing their profitability.
Tracy Lawson: At Lawson and Associates, we are the home of the Safety Intelligence Institute.
Safety intelligence is being aware of our surroundings and understanding how the health of your workforce can contribute to your business success in many ways that are not always obvious. Setting companies up for success means integrating safety into all of our core business elements and being proactive with safety in your processes.
Our purpose is business improvement through effective safety management systems.
We believe that safety doesn’t have to slow you down or be something that’s a negative.We believe that it can be a business advantage for so many reasons, especially with having a healthy workforce who through safe processes helps improve the effectiveness and efficiency of an operation.
Steve LaClair: Safety in business starts with having a solid foundation. Spectrum Enterprise helps businesses of all sizes across the U.S. to prepare for and protect against cyber threats with networking and security solutions that include firewall, anti-malware, and antivirus capabilities.
Cybersecurity is an absolute requirement to keep a business and its employees safe. According to IBM, the average cyber attack costs upwards of $4 million.
And on average, it takes up to 200 days to detect the breach. Ransomware attacks cost an estimated $20 billion last year. So it’s clear that data breaches and cyber attacks have the potential to be very costly.
Also, businesses can be fined or prosecuted for a cyber attack if they are deemed to be negligent in not providing enough protection for their business and clients. From our perspective, safety in business means having a cyber security policy and ensuring that employees know and adhere to the policy.
Mencel: Thank you, everyone. Yes, there have been many cyber breaches in the past few years; it’s scary what people can find out about you. What are the long term consequences if a company ignores the importance of workforce, workplace and data safety?
Lawson: I will address workplace and workforce safety. If we’re not looking at our people as human capital and emphasizing the sustainability of human capital, we’re missing the mark at a community level as well as an organizational level.
We have so much emphasis on environmental sustainability and I’d love if we could shift the focus on the human capital that the environment supports.
The environment is very important but our people are even more important. There are the obvious vital issues with injuries and illness, but the long term cultural impact on a business’ effectiveness and management systems is often overlooked.
For a business to not only survive but thrive – especially with the struggles we’ve had over the last two years – we’ve got to make sure that our people trust us and feel safe in their workplace. And that we’re providing them with an environment where they can be effective and allowed to do their job the right way and the safe way.
Besides the obvious injuries and illnesses and costs to a business, which are substantial, there are long term effects on your rapport and reputation in the community. If you lose that, you’re no longer attracting top-tier performers and people will steer clear of your organization, which is very damaging. Internally, you may lose key people within your organization.
The human capital attacks that can occur within an organization to employees who feel disenfranchised and not cared for on the most basic human level of their own personal health and safety can be devastating.
The goal should be trying to look at things from a different perspective and look at our businesses as processes; we need to provide good processes for our people to work within and set them up to succeed. We can’t cut corners on the health of our people.
LaClair: The question about any long term consequences if a business ignores workplace and data safety is really interesting, because it’s something that is often misunderstood and overlooked.
When news breaks about a cyber attack, the focus is usually on how much customer data was compromised or stolen and what the initial costs were. However, there are other long term negative impacts that may not make the headlines.
According to Deloitte, the immediate cost of a cyber attack really only represents 10% of the total cost of that incident to an organization.
Microsoft provides a little more detail than other organizations that have been under a cyber attack and indicates that 22% of them have completely lost customers.
And of that, 40% of those organizations have lost more than 20% of their current customers. A major impact to a business, whether it’s warranted or not, is the perception that the business wasn’t doing enough to protect sensitive information.
Remediation work from a business’s cyber, malware or ransomware attack can be very costly. There’s also a different kind of “slow burn” cost to a business’s reputation and potential litigation, which Tracy mentioned earlier, as well as the loss of a competitive edge that a business might have.
All of these factors are more difficult to quantify compared to initial costs, but they are real impacts to consider. The long term consequences of a cyber attack can be much more impactful than the actual attack itself.
Ando: I have a follow-up question for Steve, more in the context of current events. Recently, there was a meat-packing company on the Mainland that paid, I believe, close to $5 million to get their systems back online.
What you’re saying is that the ultimate cost to them is going to be possibly up to 10 times that $5 million extortion they just paid?
LaClair: The overall cost of any cyber attack is definitely more costly than what we hear about as there are additional remediation costs down the road. It’s more difficult to quantify how much to expect in terms of the loss of customers, and the loss of trust, too. But it’s absolutely going to cost a lot more money than what we read about in the news headlines.
Ando: Tammy, to answer your question: From a carrier’s perspective, it does impact our policyholders more on a financial basis.
What we see in the insurance world typically is a company that is having a lot of injuries and necessitating payouts on claims.
Their experience modification factor, or ex-mod, increases as a result. Let’s compare an average company with an unsafe company that has experienced a lot of injuries. If the average ex-mod is 1.0 and the unsafe company’s ex-mod is 2.0, now they’re paying twice as much as their competitors.
Where do you make that up? If you’re a construction company putting in a bid on a project, that amount of money doesn’t just disappear; you have to account for that.
So, as Steve and Tracy said, this will affect a company’s competitiveness because now, it has to factor in more operational cost than its competitors.
We spend a lot of time speaking with our policyholders and getting them to understand that there’s a moral side to caring about your employees.
But also, as an owner, this will hit you in the pocketbook. As a company, these costs are going to affect you. It’s almost like an auto policy where, if I’m an unsafe driver with a lot of accidents, I’m not going to pay the same amount as a good driver with no accidents.
Larger general contractors don’t want to work with subcontractors that have horrible track records because it’s going to affect their project. So, there’s the financial side and there’s the moral side that Tracy talked about and they go hand-in-hand.