Valuation of Risk Reduction

Because Elm’s Principals have served as in-house corporate staff and facility HSE professionals, we are well aware of the pressures on client organizations to spend money wisely. Frequently, this requires an analysis demonstrating the economic return to be generated by the expenditure. Elm brings a unique perspective to economic valuation of EHS management activities because we have first-hand experience utilizing existing methods, such as

  • McKinsey & Co.’s Activity Value Analysis™
  • Stern Stewart’s Economic Value Added (EVA)™
  • Traditional Return on Investment (ROI) methodologies.

In addition, we have developed our own innovative valuations that leverage risk management concepts with economic analyses. For instance, Elm developed our Return on Investment of Cost Avoidance (ROIa)sm that demonstrates financial return of EHS risk reduction investments in terms of both a reasonable anticipated loss and the cost of generating new profits needed to recover associated profits.

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