What is the cost-benefit-analysis or ROI for travel risk management?

As with all things travel, demonstrating value, return on investment [ROI] or conducting a cost-benefit-analysis is a key priority for travel, risk and procurement managers. However, when it comes to demonstrating similar ROI’s for travel risk management [travel health, safety, security and risk management / duty of care] the task has proven a challenge for many. Here are some suggestions and key data points for travel, risk and procurement professionals.
The first step in the process is to determine practical business benefits associated with travel, legislative or regulatory control requirements, and industry research along with benchmarking against “doing nothing”.

Health and Safety ROI

4:1 to 6:1

The American Society of Safety Engineers white paper addressing “….the return on investment for safety, health and environmental management programs” 2010 found that such investments returned between 4:1 to 6:1 which means every dollar on safety, returned $4-$6 in return.

Source: ASSE

Business Travel ROI

15:1

Across all industries, the average incremental return on investment was roughly $15 for every $1 spent on business travel. We observed some industry segments with incremental return on investment as high as 50.7:1, while other industry segments had relatively lower return opportunities at 5.3:1. Additionally, our analysis indicates that it is not necessarily the industries with high levels of business travel that may experience the highest return from increasing business travel expenditures”.

Conferences and Trade Show ROI

4:1

“Respondents reported that on average, customer meetings had the greatest ROI with $15 to $19.99 earned per dollar invested. Conferences and trade shows yielded $4 to $5.99 in earning per dollar”.

Average Cost of Business Travel

Domestic: $USD 949

International: $USD 2,600

This is just the value of the journey as an economic data point. If you factor in the opportune costs [pursuing a $10 million dollar deal] coupled with the cost to the business for the employee [average expatriate position costs USD$150,000 just in recruitment] then you have a sizeable investment at stake. So much so, if it were a building or a machine, you would be thought foolish to only spend $3-$5 on preventative measures. However, this is around the level of ‘prevention per journey‘ employed to date. Most of the reason this occurs is that travel managers are typically measured on cost containment, not profit generation. Additionally, expenses for personnel are accrued under ‘expenses’ not cost of sales, along with all associated cost of travel accumulated in a variety of cost centres and billing codes. Noone sees/understands the single journey loss potential. That is the what I refer to as “variance on return” as opposed to ROI.

Average International Business Travel ROI

=

$USD 39,000*

*[$2,600 by 15 equals $39,000] Not including staff cost, reputation/legal damage and opportune business costs
Health and safety breaches, including those relating to travel are criminal in nature. This means that a jury will review the case. One of the primary legislation terms of reference is “as low as reasonably practicable” which in real terms it would be very difficult to convince a jury that a $3-$5 dollar preventative measure was superior to a $10-$100 measure if it would have prevented a serious, negative outcome. Especially for an asset value of hundreds of thousands of dollars. ROI therefore can be measured not only on expenditure, but avoidance of both negative outcomes, legal cases and brand damage.
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$100 spent on Travel Risk Management

Creates a potential ROI of

390:1*

*[$39,000 divided by $100] Not including staff cost, reputation/legal damage and opportune business costs

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Travel risk management in this instance relates to travel health, safety, security and risk management systems that reduce or eliminate loss or damage throughout the course of the individual journey, saving the company full or partial loss due to claims and lost opportunity/business.

20 annual trips for a business

places up to

$USD 780,000 at risk*

*[20 times $39,000]

A single business trip

could result in up to

$USD 2,289,000* in losses

*[$39,000 plus $200,000 plus $2,000,000 plus $50,000] Business travel costs plus employee annual salary plus value of business deal plus medical/legal costs.

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$100 spent on Travel Risk Management

Creates a potential ROI of

22,890:1*

*[$2,289,000 divided by $100]

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All these are not just applicable for travel to ‘high risk” locations either

Additional References:
Rising Costs of Business Travel

Travel Safety Experts
Travel Safety Experts

Travel health, safety, security and risk management experts

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