Regulatory Cases and the Importance of Risk Management

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We’re often asked how effective risk management can save time and money for our clients, as well as protecting them from legal action. 

As a responsible broker, we place avoidance of claims as one of our top priorities. An efficient risk management system not only helps to prevent claims, but the checks and documentation associated with effective risk management show that the defendant company have taken the adequate precautions to prevent risk. In court, that could be the difference between a claim being rejected, and a gross negligence manslaughter verdict.

In this article, we’ll go through some real-life examples of times when proper risk management has saved clients time and money. 

But first, here’s a brief explanation of how the Health and Safety regulation landscape currently operates.

Regulatory Intervention – Enforcement Authorities

  • HSE
  • Police
  • Environment Agency
  • Local Authority
  • Other

– Civil Aviation Authority
– Inland Revenue
– Office of Fair Trading/Trading Standards
– Fire Authorities


  • Mission statement: “The prevention of work-related death, injury and ill-health”.
  • Business Plan for 2017-18 is to reduce government funding and therefore ensure “value for money for the taxpayer”.
  • This means that the HSE is now mostly self-funded, and therefore it is in their interest to conduct investigations and raise actions against companies/individuals.
  • The cost implications are as follows:

– Fees For Intervention (FFI): These are HSE charges for investigating breaches and taking action to put them right.
– Proactive Inspections: These are inspections that lead to a Notice of Enforcement (NoC), prohibition or improvement notices for a material breach
– HSE hourly rates for the above are £129 per hour (from April 2018)
– The average fee is £700 – but several each month are over £10,000.
– HSE income from investigations was £10.1m in 2014/15. It was £14.7m in 2015/16. It will almost certainly have increased again when the next set of figures are released.

  • The trend is for increased Notices of Prohibition/Improvement to be served, and prosecutions are increasingly dramatically. As an example, since the amendments to the sentencing guidelines, there has been a 1000% increase in prosecutions against individuals (directors, managers), along with the corresponding action against the corporate entity.

Regulatory Authorities – Priority Cases

  • Fatalities
  • Inquests

-These will have an impact due to Regulation 28 reports submitted by the coroner. A Regulation 28 report is completed when the coroner is obliged to offer a perspective on a case wherein he has a legal duty to prevent further deaths. This becomes a public document and the client has 56 days in which to put right any issues raised by the coroner.

  • Catastrophic injury
  • All sectors, not just traditional high-risk industries
  • Individual offences
  • Evidence of a poor Health & Safety record, ie:

– Previous prohibition notices
– Previous HSE or local authority investigations

  • Poor culture
  • Lack of investment in risk management

The key point is that the HSE does not have to have been alerted to a serious incident for a decision to be made to investigate a company. Multiple RIDDOR report submissions could indicate to the HSE that a client has a poor Health and Safety and therefore an investigation is warranted.

Once on site, the HSE can investigate anything they so desire and are not obliged to limit themselves to the incident(s) that gave rise to their initial approach.

Practical Consideration and Risk Management

It has been ascertained that there is an increased correlation between a proactive approach to risk management and:

  • Avoiding prosecutions
  • Reduction in penalties and costs
  • Reduction in likelihood of individual culpability

The areas which would need to be assessed post-incident as part of a risk management review would be:

  • Health and Safety policy
  • Training
  • PPE
  • Risk assessments
  • Safe systems of work/permits to work
  • Contractors and visitors
  • Workplace and workplace equipment
  • Monitoring
  • Culture

Where evidence exists that individuals have ignored the application of effective measures, they are at a heightened risk of formal action against themselves as well as the company.

Cost Impact – Example 1

  • The employee of a client suffered a head injury after falling from a gantry.
  • The client immediately brought about swift and far-reaching improvements to their Risk Management procedures, before the HSE could issue any Improvement Notice. As such, by the time that the HSE had issued an Improvement Notice, the client had not only already completed the work required, but had gone even further in strengthening all areas of their Risk Management.
  • The potential fine in this matter was estimated to be £500k.
  • The cost of the post-incident actions taken by the client was in the region of £40k.
  • In the end, the HSE chose not to prosecute the client in light of their proactive approach to Health and Safety post-incident.
  • This meant that the client saved approximately £440k due to the action that they took, not including the potential legal costs that would have accrued during the prosecution process.

Cost Impact – Example 2

  • An employee suffered a serious injury at the client’s theme park.
  • The client accepted a breach and took swift and far-reaching steps to improve their Risk Management.
  • The court chose to fine the client regardless, as there had been six previous Improvement Notices issued against the theme park.
  • The court initially set the fine at £120k.
  • However, the court then reviewed mitigating factors in respect of the value of the fine, and concluded that:

– The company operated in a modest manner financially and the directors did not take significant salaries. As such the fine was reduced by 20%.
– The company employed a large number of employees in the local area, and an exorbitant fine would have put such employment at risk and therefore negatively impacted the local area’s economy.
– The company had done a large amount of work with community groups and charities to allow disabled children to attend the park. As such, the fine was reduced by a further 10%.
– Finally, the swift acceptance of responsibility reduced the fine by one-third, mean that the final total came to £57,600.
– This reduction of over 50% was entirely due to the pro-active approach taken by the client and the presentation of this approach to the HSE and the court.

if you’d like to speak to Romero Insurance Brokers for more information on the importance of effective risk management and health and safety protocol, call us today or send us a message via the contact form at the top of this page.

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