Why estimate incident cost?
Insured (direct) costs are only part of the bill. Uninsured costs — overtime, investigation time, lost productivity, rework, reputation — often dominate. A simple planning model is:
Total ≈ Direct × (1 + Indirect ratio)
Common teaching ratios run from about 1:1 to 1:5+ (indirect:direct) depending on severity and sector — use your own claims history when you have it.
For a safety investment: ROI % = (Annual savings − Annual cost) ÷ Annual cost × 100.
Incident Cost Calculator
Incident cost · iceberg + ROI
Estimate total cost from direct costs and an indirect ratio, optionally with a simple safety programme ROI.
Formula: Total = Direct × (1 + Indirect ratio) · ROI % = (Savings − Cost) ÷ Cost × 100
- Illustrative planning — not a financial statement method.
- Define direct costs consistently with your finance / insurance team.
- Document savings assumptions before presenting ROI to leadership.
Frequently asked questions
What counts as direct cost?
Typically medical, compensation, and damage that insurers or finance book as claim costs. Definitions vary — stay consistent.
Is the iceberg ratio scientific?
It is illustrative. Real ratios vary widely. Prefer site cost models built from your own incidents.
How do I estimate savings for ROI?
Use avoided incidents × average total cost, or productivity gains your business case documents — do not invent unverifiable figures.
Is this accounting advice?
No. It is an HSE planning aid for toolbox talks and business cases, not a financial statement method.
