Impacts of Workplace Violence: An Assessment of Social and Financial Risks
- Safer with SCOUT Communications
- Mar 22
- 18 min read
Safer with SCOUT, a NobleSix Initiative
Published February/March 2025
Author: Lance Awsumb, MBA
Safety and security are foundational needs for any business or organization, and yet it seems that everywhere we turn we hear about increasing rates of violence. A recent example at the time of this writing is the shocking murder of United Healthcare CEO Brian Thompson outside of a conference in Midtown Manhattan. Events such as these are difficult to ignore in the news, and impossible to ignore when they strike close to home. And yet unless we have experienced workplace and work-related violence directly, it is tempting to think that it will never happen to us. We conveniently explain to ourselves that the media amplifies and sensationalizes violence, but it can’t happen here: not in our workplace. So, is it all media hype? For anyone who holds a position of responsibility for their colleagues and customers, we owe it to ourselves to ask the question: what risk does violence in the workplace pose to my organization?
Risk Perception
Although it is important to assess the risk of workplace violence, it is also a challenging task. This is because most people “rely on intuitive risk judgments, typically called ‘risk perceptions’” (Slovic, 1987) to inform their opinions on risk. The issue with risk perceptions is that a variety of human cognitive biases get in our way when we try to gauge risk based on our own experiences and observations. The following are only a few of the many well-known biases that affect our perception of risk:
Bias for normalcy: “Among the truisms about emergency planning is that citizens do not like to think about the negative consequences of potential disasters - a state of mind that tends to inhibit a spirit of preparedness. Regrettably, this attitude generalizes as well to public servants and to elected officials.” (Perry & Lindell, 2004)
Optimism Bias: People rate “their own chances to be significantly above average for positive events and below average for negative events.” (Weinstein, 1980)
Availability Heuristic: People estimate the likelihood of an event “by the ease with which relevant instances come to mind.” (Tversky &, Kahneman, 1973)
Dread risk effect: “People show higher sensitivity to dread risks, rare events that kill many people at once, compared with continuous risks, relatively frequent events that kill many people over a longer period of time.” (Bodemer, Ruggeri, & Galesic, 2013)
In other words, an overreliance on risk perceptions causes humans to avoid thinking about uncomfortable yet relevant risks, improperly dismiss risks that don’t appear to fit our circumstances and worry about risks that may not be significant. Ultimately, we underestimate some risks and overestimate others, leading to over-preparing for lesser risks while failing to prepare for important risks.
Risk Assessment
When it comes to workplace violence, adequate preparation starts with objectively assessing the risks your organization faces. As it turns out, the best way to address this question is by using well established risk assessment techniques. We start with a conceptual model: “Risk is a measure of the probability and consequence of uncertain future events” (Yoe, 2019). A diverse range of fields and industries have adopted this view of risk, due to its ability to break down risk into individual and measurable components, as well as identify what knowledge gaps we have in our assessment of risk. It is easy to conceptualize this using a risk matrix, as shown below.
Risk = (Probability of Hazard) x (Consequence of Hazard)
This definition of risk is important: a hazard with a low probability of occurring can be considered a high risk if the consequences are high. The reverse is also true: a hazard with a high probability of occurring and low consequences can also pose a high risk. The hazards with the greatest risk are those with both a high probability and high consequences, while those with the lowest risk have a low probability and low consequences. Outlier Risks are rare events that result in extreme consequences. Outlier risks require special consideration, since they are never considered low risks, yet it is not always possible to manage them satisfactorily.
Now that we have a framework for assessing risk, let’s use it to better understand the risks stemming from violence in U.S. workplaces. The following assessment relies on available historic data and statistics at the national level and is not intended to reflect the actual risks of a specific business or organization. Rather, it intended to serve as a general guide to help you better understand risks faced by U.S. workplaces in general. It is always best to tailor your risk assessment to your specific industry and organization.
Consequences of Violence in the Workplace
There is no question that violence in the workplace has extremely harmful consequences for the people who work in the organization, as well as their families and communities. According to a joint report by the U.S. Department of Justice, Department of Labor, and Department of Health and Human Services, “acts of violence in the workplace can disrupt nearly all aspects of society. They can result in physical, psychological, and financial costs to victims. They can also drive down employee productivity and morale and increase turnover. Organizations can also endure financial costs due to lawsuits and increased employee medical insurance rates. Coworkers, witnesses, victims’ families, and the community can be negatively impacted” (Indicators of Workplace Violence, 2022). Workplace violence can occur in many different forms, with different motivations leading up to the incident. It can be difficult to predict if and when hazards of workplace violence might occur, and what circumstances might trigger violent individuals to act. Workplace violence can be acted out in the form of altercations, robbery, assault, sexual assault, rape, homicide or attempted homicide, and active assailants bent on mass murder. The consequences produced by these actions can cause grave social harm, affect the operations of your business, and threaten the future of your firm. Below are some of the consequences to consider when conducting a risk assessment.
Workplace Violence Hazards and their Probability
From 2015 to 2019, 1.3 million people were victims of workplace violence each year (Indicators of Workplace Violence, 2022). During that same time period, an average of 737 people were killed as a result of intentional violence by a colleague each year, which accounted for more than 1 out of every 10 work-related deaths. There were 125,000 workers injured with minor injuries, 25,000 with serious injuries, and 3,000 who were hospitalized because of workplace violence.
Mass shooting events and mass killings represent a growing hazard in the U.S., and the workplace is no exception. Mass killing are those where 4 or more people are killed, regardless of weapon. In the time period from 2015-2019, between 2 and 8 mass killings occurred at workplaces each year, resulting in an average of 48 people being killed and another 43 injured in mass killings each year on average (Associated Press/USA Today/Northeastern University, 2024).
Mass shootings are defined as events where 4 or more people are injured or killed. Since 2014, the number of mass shooting events in the U.S. has increased from 272 incidents to 656 in 2023, a 140% increase (Gun Violence Archive, 2024).
These statistics are concerning for several reasons. First, there is clearly an increasing trend of violence in the U.S. Since two out of every three active shooter incidents are prevented before they begin, the actual likelihood of being targeted by someone intent on causing mass casualties is much higher. Second, there is a bias for undercounting non-fatal workplace injuries because the Bureau of Labor Statistic’s “system for recording work-related injuries and illnesses undercounts the total number of injuries associated with chronic or acute conditions” (Huang et al.,2011).
Although these statistics understate the risk, let’s apply this historic information to estimate the probabilities associated with workplace violence hazards. An analysis of data from 2015-2019 (Indicators of Workplace Violence, 2022) shows that about 1 in every 130 employees are victimized by workplace violence every year. About 1 in every 1,160 employees sustain minor injuries because of workplace violence, while 1 in 5,800 employees sustain serious injuries. Although the rates of occurrence of serious injury (1 in 5,800 employees), hospitalization (1 in 50,000 employees), and death (1 in 200,000 employees) are much lower than the overall rate of workplace violence, let’s consider how these probabilities add up over time. A common risk perception is a low annual probability means it “can’t happen here.” However, consider the likelihood over a 5-year period, a common planning horizon for many organizations.
Serious injuries. On an annual basis, a small organization with 100 employees has a 1.7% chance of at least one act of violence that results in serious injury. Over a 5-year period, that probability increases to 8.3%. These probabilities increase for a larger organization with 1,000 employees, resulting in a 15.9% chance on an annual basis, and a staggering 57.8% probability over 5-year period.
Hospitalization. On an annual basis, a small organization with 100 employees has a 0.2% chance of at least one act of violence that results in hospitalization. Over a 5-year period, that probability increases to 1%. These probabilities increase for a larger organization with 1,000 employees, resulting in a 2% chance on an annual basis, and a 9.5% probability over 5-year period.
Victim Killed. On an annual basis, a small organization of 100 employees has a 0.05% chance of at least one act of violence that results in fatality. Over a 5-year period, that probability increases to 0.3% - which translates to about 1 in every 500 small organizations experiencing this hazard over 5 years. These probabilities increase for a larger organization with 1,000 employees, resulting in a 0.5% chance on an annual basis, and 2.5% probability over 5-year period - which translates to about 1 in every 40 larger organizations experiencing this hazard over 5 years.
Given the gravity of these consequences, these likelihoods should afford little comfort. The table below illustrates the annual rates of occurrence among U.S. employees for each hazard, and how these rates translate into annual and long-term probabilities. Bear in mind that the rates and probabilities presented here are based on historic national level data, which means that the risk to your organization might be different.
Risk Matrix
Now that we have identified several workplace violence hazards, and evaluated probabilities on a per-employee basis, this information can be visualized in a risk-matrix to compare the relative risks of each hazard. Bear in mind that as demonstrated above, the probabilities of each hazard also depend on the size of the organization. The following risk matrix reflects the per-employee risk based on historic data at the national level.
The hazards range in severity from violence with no physical injury to death of the victim. Each hazard is exponentially worse in terms of its social and organizational consequences. This comparison demonstrates that although the probability of each hazard decreases by about a factor of 10 as the consequences become more severe, the risk associated with each hazard is relatively the same. This insight is a result of adopting a risk framework that considers both the probability and consequences of workplace violence hazards in the assessment of risk. A key takeaway is that U.S. employers should abandon the paradigm of “but it will never happen here” to a paradigm of risk assessment and effective risk management. It is especially important to know how unique risk factors such as industry, size, and others affect your organization’s risk matrix.
Financial Risk Premium
While the social ramifications are by far the worst aspect of violence, there is also a substantial financial risk imposed by workplace violence hazards. A common misconception is that insurance fully protects organizations against these financial risks, either through their workers’ compensation, general liability, or commercial property policies. However, there are a few limitations if insurance is your only form of risk mitigation.
The premium you pay on your policy only reflects some of the financial risk of workplace violence. The amount you pay for insurance is the direct risk premium, and only pays out for claims for covered losses (direct costs). The covered losses include costs such as employee medical expenses resulting from injuries, treatment for mental health, lost wages (partially covered), disability benefits, ongoing care costs, and death benefits for funeral costs and survivor benefits. Direct costs are broadly classified as medical (medical and mental health treatment) and indemnity (lost wages to worker).
Because there are many liabilities that are often not covered by insurance, employers also face an indirect risk premium that is associated with indirect costs. These often-overlooked costs can include lost productivity, overtime to cover for employee absence, loss of customers, and more. Most of the corporate financial decision makers state that for every dollar spend on the direct costs of a safety incident, they will spend at least $2.12 on indirect costs, with some stating that it could be as high as $10 of indirect costs for every $1 in direct costs (Huang et al., 2011).
Direct and indirect costs vary depending on the severity of the workplace violence hazard. Our estimates of the direct and indirect costs of hazards are presented in the table below based on an analysis of historic data. The National Safety Council (NSC) publishes statistics on the direct costs of workplace injuries and illnesses which was developed from analysis of National Council on Compensation Insurance (NCCI) claims data. A conservative estimate for indirect costs of non-fatal workplace violence hazards would be $4 for every $1 of direct costs, and $10 for every $1 of direct costs for fatal workplace violence. This is because indirect costs of workplace violence hazards are likely much higher than typical safety incidents, due to additional downtime in operations for law-enforcement investigations, time and attention from management and human resources, firing of the offending employee, recruiting and training a new employee, impacts to workplace morale, and legal expenses.
Direct and indirect costs can each drag on a firm’s profitability, though in different ways. The direct risk premium influences insurance premiums, which are recurring cash flows. The indirect risk premium, though not a recurring cash flow, is a corollary to the insurance premium. It can be thought of as what it would cost to insure against all financial consequences of workplace violence hazards, rather than only covered losses. Although it is not possible to insure against 100% of risk, the indirect risk premium is a useful concept for gauging true risk, and gauging the potential future liabilities associated with the indirect costs of workplace violence. Indirect risk premium is calculated from the annual probability and the indirect costs of each workplace violence hazard.
The following table illustrates estimated direct and indirect risk premiums per U.S. employee, again based on our analysis of the historic probabilities of different workplace violence hazards occurring. The risk premiums presented here are based on historic national level data, which means that the risk premiums that your organization faces might be different.
In total, the estimated direct risk premium for all hazards is $44 per U.S. employee, compared to an indirect risk premium of $200. Out of the total risk premium of $244 per U.S. employee, indirect risk accounts for 82% of all financial risk. These results indicate that most of the financial risk of workplace violence is not insured.
So how do workplace violence hazards compare with all other work injuries and illnesses? The National Safety Council estimates that in 2022, all workplace injuries and illnesses cost $167 billion, or $1040 per employee, including direct and indirect costs. This means that the risk premium from workplace violence hazards may account for nearly one quarter (23%) of the total risk carried by employers for all workplace injury, illness and fatality hazards.
Workers Compensation Costs
In the U.S., the cost of insurance premiums for worker’s compensation (WC) is developed by actuarial formulas and ratemaking processes that rely extensively on historic claims data, typically including three years of prior data. The established rates reflect all hazards, including WC claims resulting from workplace violence. While rates are industry-specific and can vary from state to state, it is clear that the risks of workplace violence contribute to the cost of WC premiums.
To illustrate, let’s look at what the insurance industry views as its expected losses for all WC claims. In Wisconsin, the median expected loss rate for WC is $1.07 per $100 of payroll (Wisconsin Compensation Rating Bureau, 2024). This means insurers expect a covered employee to have WC claims costing $1.07 for every $100 dollars they earn annually. Although rates vary greatly depending on occupation and from state to state, in this simple example a full-time worker earning the U.S. median wage rate of $23 per hour (U.S. Bureau of Labor Statistics, 2024) is expected to cost $514 per year in direct loss claims. For comparison, the direct risk premium of workplace violence calculated above is $44 per employee. In this example, workplace violence hazards contributed to 9% of insurance costs relative to all workplace hazards. While this proportion is likely to vary greatly depending on the industry and state, this provides a useful illustration of how workplace violence can increase WC premiums.
Another component of WC insurance that affects premiums is the Experience Modification Rating (EMR, for short), which is a multiplier that is used to adjust WC premiums for qualifying firms based on their track-record of workplace safety. A “credit EMR” reduces the premiums for firms that have a better-than-average safety history within their industry. A “debit EMR” increases premiums for firms with worse-than-average safety records. Credit and debit EMR’s are financial incentives for firms to maintain strong workplace safety cultures.
So, will an incident of workplace violence increase your firm’s EMR and WC premiums? Ultimately yes, but the answer is complicated. This is because states have adopted rules designed to limit the impact of unpredictable and large claims on an employer's EMR. The key takeaways are:
The less severe and more frequent (higher probability) workplace violence hazards will have a greater impact than more severe and less frequent hazards.
The EMR of larger firms will be more heavily influenced by larger claims than the EMR of smaller firms.
So how does this work? Most states use a split rating approach to limit the effect of large and unpredictable claims, as well as events that cause multiple claims from the same incident. This is done by separating claims into primary losses versus excess losses. The threshold that separates primary and excess losses is determined by a state-approved split point, which varies from state to state (an example might be $20,000 per claim). If a claim is below the split point, the whole claim is considered as primary losses and will affect the EMR. If a claim is greater than the split point, only the portion up to the split point will be considered primary losses, while excess losses are those greater than the state-approved split point. Some, but not all the excess losses from such claims are “ratable” – meaning some, but not all excess losses affect the EMR. The ratable portion of excess losses is determined by actuarial formulas, but in general the larger a firm’s payroll, the greater influence excess losses will have on the EMR (National Council on Compensation Insurance, n.d.).
This means that mitigating the risk of workplace violence can have financial benefits by lowering insurance costs. A strong workplace safety culture is likely to reduce WC premiums because firms with fewer WC claims tend to have a lower EMR. This is especially true for firms that face multiple safety hazards, as well as for larger firms that are more affected by excess losses.
Because states have taken measures to limit the effect of large and unpredictable claims on the EMR calculations, and since insurance companies are not in the business of losing money, it is also highly likely that direct costs of unpredictable and costly workplace violence hazards are already affecting your industry’s baseline WC costs. This is why it is important to establish strong safety cultures within not only your organization, but also your industry. We believe that widespread adoption of training aimed at preventing workplace violence and building safety cultures will eventually bring WC costs down. In the meantime, we believe that organizations that prioritize violence prevention and safety cultures will see direct benefits from lower EMR’s and WC premiums.
Shifting Legal Landscape
Even as the social consequences of workplace killings continues to remain utterly devastating tovictims, there is a rapidly evolving legal landscape in the U.S. that is driving the financial consequences for organizations even higher. Businesses and insurance companies alike have been contending with “Social Inflation” for the past decade, a phenomenon associated with rapidly increasing litigation costs and liability judgements awarded to plaintiffs by courts. Simply put, Social Inflation is associated with “increased severity of insurance claims beyond that which can be explained by economic drivers” (Swiss Re, 2024). The factors driving social inflation are described succinctly by the publication Risk & Insurance (2024):“Outsized awards and settlements in tort disputes are driven by various socioeconomic, legislative and litigation trends, such as legal system abuse, third-party litigation funding (TPLF) and escalating compensation verdicts.”
In addition to social inflation, businesses are also being held accountable in courts for reckless or negligent hiring and retention practices, including failing to address foreseeable risks. One of the most striking examples of this changing legal landscape in recent years is the December 2019 killing of a customer by a Charter Spectrum employee. After a jury initially awarded more than $7 billion in damages, the judge subsequently lowered that number to roughly $1.1 billion (Fox Business, 2024 September).
To illustrate how these trends directly affect the financial risks imposed on businesses, let’s revisit the total risk premium associated with workplace violence hazards that result in a homicide. We had previously calculated the total risk premium for homicides to be $53 per U.S. employee, based on a per-employee probability of 1 in every 320,000 employees, and a total financial cost (direct and indirect) of $17.2M per death. It is impossible to predict the outcome of litigation, but let’s look at a scenario where there is a 5% chance (1 in 20) that a court would award a liability judgement of $1 billion for a workplace violence fatality. In this scenario, the total risk premium per employee for homicides would increase from $53 to $172, a more than 220% increase in the cost per U.S. employee associated with fatal workplace violence.
Mass Shootings: Pay attention to risks that change rapidly
One workplace hazard that was not included in our risk matrix or our financial risk premium
estimates was the risk of mass killings and mass shootings. That is because the statics for these horrific events are changing too quickly, and an assessment based on historic data would likely understate the risk. Mass shooting events and mass killings represent a growing hazard in the U.S., and the workplace is no exception.
Mass shootings are defined as events where 4 or more people are injured or killed. Since 2014, the number of mass shooting events in the U.S. has increased from 272 incidents to 656 in 2023, a 140% increase (Gun Violence Archive, 2024). Mass killing are those where 4 or more people are killed, regardless of weapon. In the time period from 2015-2019, between 2 and 8 mass killings occurred at workplaces each year, resulting in an average of 48 people being killed and another 43 injured in mass killings each year on average (AP/USA Today/Northeastern University, 2024).
Although the probabilities of mass casualty events appear to be low, it is important to keep in mind that outlier risks are never low risks, especially when the rates of occurrence increase rapidly over time. The motivations of the killers continue to evolve, fueled by a number of cultural factors, not least of which is increasing access to radicalizing content on social media.
Establishing Effective Risk Mitigation Strategies
This paper presented a broad assessment of the social and financial risks to U.S. employers, based on historic data and existing workplace hazards. While the specific risks to any organization depend on unique factors such as industry, physical layout, employee count, and patron volume, it is crucial to recognize that the actual risk of workplace violence may be higher than a general assessment suggest. However, this assessment provides two clear takeaways:
Prioritize Objective Risk Assessments:
Effective risk management should rely on object assessments of risk, leveraging experts in the field of workplace violence prevention. Solely relying on subjective perceptions of risk can lead to inadequate preparedness.
Address Escalating Risks Proactively:
U.S. employers cannot afford to ignore the social and financial risks of workplace violence. This includes the increasing frequency and unpredictability of mass shootings, the rising influence of social inflation, and the heightened legal risks associated with negligence in prevention measures.
Fortunately, establishing a training program that focuses on workplace violence prevention and safety culture is an effective and cost-efficient way to reduce both the probability and the consequences of risk. Workplace violence prevention training is also one of the only risk management tools that can broadly address hazards ranging from minor altercations to active assailant situations. This is because effective training programs help your company build a safety culture in which every employee shares a commitment to reducing workplace violence, every employee is empowered to identify threats before they occur, and every employee knows what to do to before, during, and after an incident occurs.
Firms and industries that take measures to mitigate the risks of costly workplace violence hazards are more likely to see direct benefits from lower insurances costs because of lower EMR as well as lower expected losses within their industry. A meaningful training program that is aimed at establishing a safety culture in your organization not only reduces your risk but is also one of the best ways to demonstrate a commitment to protecting your employees and customers.
Effective training can be accomplished each year by your employees in 10-15 minutes sessions every 3 months. Visit saferwithscout.com to learn more.
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