Hazard Assessments Lag at Restaurant Companies: Marsh

Formal hazard assessments at restaurants are key in reducing worker injuries and insurance claims. In recent years, however, a sizeable number of companies have not conducted the required inspections, according to a recent survey.

In the Marsh survey, 49% of respondents said they haven’t conducted a formal assessment of hazard exposures in the past two years. This is a significant increase from 2020, when that number was just 33%.

Marsh reported that the COVID-19 pandemic’s disruptive effect, combined with more recent inflation, supply chain challenges, and staffing shortages, created a new layer of difficulty — probably leading to the 16% jump in respondents that had not conducted assessments.

“Most restaurants, and the risk managers who would typically be conducting the assessments, were laser-focused on addressing these evolving risks,” according to a Marsh analysis. “And, during the peak of the pandemic, restaurants were reluctant to bring in external professionals to conduct the surveys.”

This is further complicated by survey findings that show close to three-quarters of respondents said they are considering or have already started making changes to their restaurants due to decreased demand for on-premises dining.

Marsh reported an increase in restaurants offering delivery from all their locations as firms seek alternative methods to engage customers. The increased involvement of third parties delivering orders to customers has raised questions about how this changing business model impacts claims.

“The pandemic led restaurant operators to get creative on how they could serve their guests and stay within the guidelines of their specific state regulations,” said Kristi Whistle, a restaurant specialist with Marsh. Examples of this creativity include outdoor dining and multi-lane drive-through service.

“So these are relatively new exposures for a lot of these brands,” Whistle explained, “which bring new risk. And a formal hazard assessment, it’s important to do those for these new jobs that maybe didn’t even exist in 2019.”

Historical data shows it is not unusual for a portion of restaurants not to have recently conducted a formal hazard assessment; that percentage hovered around the mid-30s in 2017-20. The recent 16-point increase, however, signifies a big jump.

Circumstances aside, hazard assessments are an essential way of identifying potential dangers and recommending changes to tasks to reduce risks. Assessments identify dangers and recommend actions to cut risk. They are also required by the Occupational Safety and Health Administration (OSHA).

On this note, Marsh reported that although 69% of this year’s restaurant survey respondents said they have not seen more OSHA activity in the past year, an increase in the number of OSHA inspectors is expected to lead to more in-person inspections — underscoring the need for restaurant companies to start the process of conducting formal hazard assessments that can help them reduce risks.

Overall, Marsh shared that these assessments not only help improve a restaurant’s total cost of risk, but the resulting injury reductions can be shared with underwriters during renewal meetings to show how the restaurant brand is taking action to reduce its exposures.

Marsh’s 2022 Restaurant Risk Management Survey pulled information from 45 restaurant companies, representing more than 75 brands at over 50,000 locations.

Whistle said she is hearing that the number of restaurant companies that have not conducted recent hazard assessments is set to decrease in 2023. Risk management professionals agree now is the time to refocus on safety and training.

Moving forward, Whistle said restaurants — like all industries — will be hyper-focusing on cyber risk.

Adjusting training practices to adequately reach a multi-generation workforce is also a priority, as are implementing violence, de-escalation and active shooter training that may not have been on radars a few years ago.