Disclaimer: Sorry, farmers. This article is not about revenue protection as it applies to insurance for crops, but rather it is about revenue protection as a general business operations concept.
Revenue is the lifeblood of a business. Without it, organizations can't cover expenses, generate profits, keep people employed, and grow.
So if the ability to generate revenue is disrupted by an unexpected event — such as losing a key employee, or a hazmat response that shuts down a wing of laboratories — it can jeopardize an organization’s chances to continue operating in the long run.
Of course, there are many risks that pose threats to your revenue — some more obvious than others. That’s where revenue protection comes in. In this article, we’ll outline a simple definition of revenue protection, and show you how your EHS department can increase its value while playing a crucial role in guarding against revenue loss.
What is revenue protection?
Revenue protection is a business strategy with the goal of ensuring that expected revenue is generated and not lost. It’s a way of guarding against risks such as property damage, loss of operating capacity, damage to capital equipment, downtime of key assets, or any other disruptions to revenue-generating operations.
Unlike, say, human resources or accounting, revenue protection isn’t a single role in your organization. Revenue protection tactics can include security guards, cybersecurity specialists, auditors, billing and account managers, PR professionals, — anyone who is involved in identifying and addressing potential threats to your organization’s revenue stream.
Is environmental, health, and safety (EHS) part of revenue protection?
It sure is. EHS is an important part of revenue protection – and is often right on the front lines.
As we said before, revenue protection comes from a diverse range of roles in your organization — and EHS is no exception.
Work-related injuries and illnesses can prevent key employees from performing their jobs, resulting in lost revenue and costly medical expenses for your company. Companies lose millions of dollars each year due to injuries. (In 2017 the cost of U.S. workers’ lost productivity is estimated at $50.7 billion, according to the National Safety Council).
In research environments, revenue protection often comes in the form of maintaining consistent operations. A serious chemical spill, for example, is an event that can affect your revenue by...
- Subjecting your organization to fines and penalties.
- Incurring legal fees.
- Creating negative press that hurts your reputation, leading to reduced business.
- Slowing down production or R&D by taking research wings or equipment out of use while they are cleaned or repaired.
By investing in EHS, companies can prevent these types of situations from occurring in the first place. If they do occur, EHS can ensure that harm is minimized, and that operations can resume as quickly as possible with the least amount of disruption.
EHS members often scramble to find the information they need to protect people, assets, and property. It's clear that this kind of struggle is antithetical to supporting revenue protection. If EHS has easy and immediate access to digitized, real time, accurate information, they will be far better equipped to protect your organization.
Now, let’s look at some specific ways your EHS program can support your revenue protection efforts.
How EHS supports revenue protection
One way your EHS department can help protect against loss of revenue is by developing and implementing effective training programs. Training helps researchers do their jobs safely and avoid costly mistakes. Not only that, but training can improve productivity to ensure researchers are performing at their peak. Improper training and record management can also lead to costly fines.
Losing access to a big piece of equipment or a specialized research zone for a length of time can set your projects back for months or even years. Effective equipment management ensures that assets are inspected, serviced, and maintained regularly to keep them in good working order. It also ensures that researchers get the appropriate training for the research equipment they use so that they can work safely and follow proper operating protocols.
Improving First Response
While it’s an uncommon occurrence, a first response can result in significant costs both upfront and in lost access to research areas and equipment. During a first response, minutes matter, and every minute has a dollar amount tied to it. A short delay can lead to a greatly worsened outcome, so the more quickly your EHS team can act and provide necessary information to first responders, the more the impact will be mitigated. In the case of a fire or high-risk chemical incident, first responders are often instructed to review the hazards and materials present before entering the building or space.
Revenue protection goes hand in hand with loss control. While loss control is aimed at minimizing the potential for costly insurance claims, it is certainly a part of revenue protection. A loss can be an extremely disruptive event, which can challenge revenue-generating activities to continue without interruption. Both are important aspects of an effective risk management program.
Staying profitable isn’t just about finding ways to earn revenue. It’s equally important to make sure that you protect your existing revenue from the unexpected and get the most productivity out of your people. There are many ways to do this, but getting full value from your EHS department is a good place to start.
One way to start building a revenue protection strategy is to work with your EHS department to determine your potential risks and opportunities. A small-time investment today can help protect the future and the sustainability of your organization for years to come.