KN OW I N G
YO U R
BU S I N E S S
M AT T E R S
What’s Your ROLP?
by BRUCE BURTON
Loss Prevention
www.federated.ca
July 2013
You know safety and loss prevention is good for your employees and
your reputation. But when it comes to your bottom line, do you know
what your ROI on Loss Prevention (aka your “ROLP”) is? (Hint: It
might be 441%!)
BRUCE BURTON
CIP, CRM
Loss Prevention
Technical Specialist,
Federated Insurance
Fixing damage after an incident is expensive,
but once it happens, you don’t have a choice.
Property damage as a result of a fire, vehicle
damage from a motor vehicle accident or injuries
as a result of an accident have to be fixed before
“business as normal” can resume. Of course, in
the case of physical injuries, it becomes even
more complicated. No amount of work, resources
and money can make up for the loss of an
employee.
Protecting your people is a given, but beyond
that, loss prevention can have a healthy impact
on your bottom line. After all, a bill you don’t
have to pay is as good as money in the bank. So
how can you boost your profits by realizing a
ROLP?
WHAT DOES ROLP EVEN MEAN?
ROLP, or “Return On Loss Prevention,” is the
ratio of increased profits relative to the cost of
the loss prevention efforts that cause them. In
2009, the American Society of Safety Engineers
reported that, on average, it is believed for every
dollar spent improving workplace safety, it
returns about $4.41. That’s an average ROLP of
441%!
HOW GREAT LOSS PREVENTION
PROGRAMS MAXIMIZE YOUR ROLP
•• Makes your employees better. Employees
who are properly aware of all hazards and
are properly trained on how to deal with
them tend to be more efficient workers. They
respond quickly to potential hazards to avoid
losses and perform their work conscientiously.
These all add up to increased profits by
avoiding losses and increasing productivity.
•• Spots trouble before it can hurt you. Provide
opportunities to identify hazards through
regular inspections, quality control programs
and procedures to handle deficiencies, which
can then avoid and/or reduce losses, and
maximize profits.
•• Ensures losses aren’t lost opportunities.
The only thing worse than learning the hard
way? Going the hard way and not learning at
all. By learning from near misses, accidents
without losses, and accidents involving losses,
you can improve or create new loss prevention
programs.
•• Limits the impact of emergencies. With
emergency procedures in place and with
employees that are properly trained on
emergency response, you are prepared to act
quickly and correctly during an emergency.
That quick response could avoid or mitigate
any losses, again increasing profits.
•• Keeps your Worker’s Compensation
premiums low. By complying with
occupational health and safety legislation, you
help ensure your Worker’s Comp premiums are
minimized.
UNLOCKING ROLP’S HIDDEN ELEMENT
It’s important to keep in mind that preventing
every kind of loss—even if it’s insured—is
important. Even insured losses have costs that
insurance doesn’t cover. Depending on the
coverage you’ve purchased, these uninsured
costs could include deductibles, loss of use
of equipment and/or vehicles, establishing
temporary locations, hiring and training
replacement employees, loss of customer
goodwill, negative impact to business reputation,
owner and /or manager’s time, possible increased
insurance premiums, etc.
KN OW I N G
YO U R
BU S I N E S S
M AT T E R S
Statistics show that uninsured costs can be as much as 3.5 times
the costs paid by insurance, and they can have a significant
impact on your bottom line. For example, if you have a $5000
uninsured loss and your business has a 10% profit margin, you
would have to increase gross sales by $50,000 to recoup that loss.
THE BOTTOM LINE ON ROLP
Every functional operation of a business should be making a
contribution toward profit. Loss prevention is no exception.
© Federated Insurance Company of Canada. All rights reserved.
This document is provided by Federated Insurance Company of Canada
(“Federated”) for informational purposes only to augment your own internal
safety, compliance and risk management practices, and is not intended as a
substitute for assessment or other professional advice by a qualified person
or entity. Federated makes no representations or warranties regarding the
accuracy or completeness of the information contained in this document.
Federated shall not be responsible in any manner for any loss, or any direct,
indirect, consequential, special, punitive or other damages, arising out of
your, or any other person’s, use or reliance on the information contained in
this document.
When all levels of the company are involved in the creation,
maintenance and enforcement of a loss prevention program,
success shouldn’t be far behind and your ROLP—and the
resulting profits for your business—will be maximized.
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of Federated Insurance
Company of Canada
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