Economic effects of implementing internal control of health, safety and environment: A retrospective case study of an aluminium plant

Abstract

Internal control (IC) is a key regulatory strategy in Norway to ensure, that companies comply with the safety, health and environment (SHE) legislation. According to the IC regulations, it is mandatory for the companies to establish formal SHE management systems. A retrospective case study of an aluminium plant, covering ten years, is presented. During this period, a restructuring program took effect. An upgrade of the plant's SHE management system based on IC principles from the offshore industry, was an integrated part of this program. An evaluation of this program has focused on its economic effects. Results show that significant improvements in the SHE results have been accomplished. Management's priorities of IC have not paid back from a SHE perspective, due to the low costs to the company of SHE related losses. IC may be economically sound, only if its synergistic effects on the total restructuring program are considered. At the studied plant, a unique set of conditions existed when the restructuring program was implemented. Experiences from the case study point especially at the importance of two factors in implementing IC. One factor is plant management's motivation, where the corporate policy and the high consequences of severe accidents have played vital parts. The second is the need of integrating IC in a comprehensive management strategy.