5.1 Economics of Loss Prevention

Loss prevention is concerned with the avoidance both of personal injury and of economic loss. In both spheres there is an economic balance to be struck. But there are also quite difficult problems in making the economic assessments. There is no doubt, however, about the economic importance of loss prevention. Some costs arise through failure to take proper loss prevention measures; others are incurred through uninformed and unnecessarily expensive measures. Both types of cost are numerous and can involve major items. The financial viability of a project is often determined by loss prevention factors.

In today s environment, many loss prevention measures that were optional in the past are now mandated by government regulation. Others are voluntarily provided in some countries as they have become industry practice . Still others are provided due to court rulings in liability cases. In the above situations, traditional cost benefit analysis studies may not be relevant.

Selected references on process economics and on economics of loss prevention are given in Table 5.1.