By: Dr Khairul Hafezad Abdullah, Senior Lecturer in Occupational Safety and Health Management, School of Business Management, Universiti Utara Malaysia
Almost every organisation says that safety is a priority.
We see it in corporate policies and annual reports. Senior management speaks about it during town halls, while employees are regularly reminded that safety is everybody’s responsibility. Some organisations go further and describe safety as one of their core business values.
There is nothing wrong with any of this. But there is a more difficult question that businesses should perhaps be asking. The question could be, if safety is truly a priority, where is it in the budget?
Workplace safety is not conveyed by statements of commitment alone. Once an organisation decides that a particular risk needs to be controlled, somebody eventually has to pay for that control.
A machine may require additional guarding. Ageing equipment may need replacement. A ventilation system may need upgrading. Even so, workers handling hazardous chemicals may require exposure monitoring, health surveillance, and appropriate protective equipment. Supervisors may need competency training.
None of these comes free.
This is where occupational safety and health, or OSH, becomes not merely a safety issue, but a financial management issue.
When risk assessment meets the budget
Consider what happens in an ordinary workplace.
A company conducts a risk assessment and identifies several significant risks. The safety team proposes additional controls. Some can be addressed through procedures, training, or better supervision. Others require expenditure.
Once the recommendations reach management, however, the language often changes.
The discussion is no longer only about likelihood and severity. It becomes a conversation about quotations, capital expenditure, operating expenditure, procurement cycles, and whether sufficient allocation is available.
This is understandable. No organisation has unlimited resources, and management must make choices among competing demands.
But what happens when an organisation has identified a significant workplace risk and the money needed to control it is not available?
There can be a gap between what the organisation knows should be done and what it is financially prepared to do.
I would call this the safety budget gap.
A risk may have been identified. The appropriate control may be known. The cost may even have been estimated. Yet, implementation is postponed because the allocation is unavailable or another expenditure is given priority.
The risk, of course, does not disappear simply because the budget is not approved.
A risk register without corresponding financial planning can therefore become a record of known problems rather than a mechanism for solving them.
Safety has a price. So, does failure
One difficulty with safety expenditure is that it is highly visible.
A finance manager can see the RM50,000 requested for machine guarding. Management can see the cost of replacing ageing equipment. Training has a price. Personal protective equipment has a price. Monitoring has a price.
The accident that has not happened, however, has no invoice.
The cost of prevention appears in this year’s budget. The financial benefit of an accident that did not happen is much harder to see.
That can make prevention appear expensive.
But declining or postponing safety expenditure does not necessarily make the cost disappear. It may simply move that cost somewhere else, and perhaps to another year.
When a serious workplace incident occurs, an organisation may have to absorb production downtime, damaged equipment, investigation costs, medical and compensation consequences, replacement labour, overtime, and management time. There may also be legal and reputational consequences.
Some costs are straightforward to calculate. Others may not.
How does a company calculate the cost of losing an experienced employee for several months? What is the financial value of management time spent responding to a preventable incident? What about interruption to production or the loss of confidence among employees?
These are not merely safety questions. They are business questions.
The real choice is therefore not always between spending on safety and saving money. Sometimes, it is between financing prevention now and financing failure later.
Spending more is not necessarily the answer
There is an important qualification.
Financial commitment to workplace safety does not mean that companies should simply spend more. They need to spend better.
A large safety budget is not necessarily evidence of a safe workplace. An organisation could spend heavily on campaigns, banners, merchandise, and annual safety events while postponing an engineering improvement that would substantially reduce a serious risk.
The starting point should therefore be risk.
What are our most significant workplace risks? What controls are required? How much will they cost? Which need immediate attention? Which can reasonably be incorporated into longer term capital planning?
The principle is straightforward, that is, safety expenditure should follow risk.
Different organisations will consequently require different levels and forms of investment. A manufacturer operating ageing machinery will have different priorities from a university, logistics company, or financial institution.
There is little value in asking how much another organisation spends on safety without first understanding the risks being managed.
The CFO belongs in the safety conversation
Malaysia’s occupational safety and health framework has also evolved. The Occupational Safety and Health (Amendment) Act 2022 came into force on June 1, 2024, reinforcing the importance of systematic workplace risk management.
This makes the financial dimension increasingly difficult to ignore.
A safety manager can identify a hazard. An engineer can recommend a solution. But if that solution requires RM200,000, the final decision may rest with people who have no formal safety title.
It may sit with the chief financial officer, chief executive, procurement committee, or board.
Perhaps finance therefore deserves a more explicit place in the safety conversation.
This does not mean that the CFO should decide what constitutes an acceptable workplace risk, nor should every safety decision be reduced to a return-on-investment calculation.
Rather, organisations should connect their risk management process with their financial planning.
When preparing an annual budget, management could ask a simple question alongside expenditure on technology, maintenance, expansion and other priorities; What financial resources will we need next year to reduce our significant workplace risks?
Some controls will require immediate funding. Others may need multiyear capital planning. What matters is that the decision is measured, documented, and connected to the organisation’s actual risk profile.
Safety professionals also have a role to play. Increasingly, they need to communicate not only hazards and controls, but also cost, urgency, implementation options, and the consequences of postponement.
Finance professionals, meanwhile, need to recognise that rejecting a safety expenditure does not necessarily represent a saving. Sometimes, it represents a risk that the organisation has decided to retain.
Look at the budget
For years, we have talked about management commitment to safety. We look at what leaders say, whether they participate in safety activities, provide training, and demonstrate visible leadership.
All of this matters.
But perhaps there is another test of commitment, by considering the question of what happens when safety requires money?
Businesses already allocate substantial resources to protect machinery, buildings, information systems, inventories, and other assets because they matter to organisational continuity. The people who operate those systems, manage those assets, and create that value deserve no less serious consideration.
So, the next time an organisation says that safety is one of its priorities, perhaps we should look beyond the safety policy displayed on the wall.
Look at the budget.
A safety policy tells us what an organisation says it values. Its budget tells us what it is actually prepared to protect.
