Workplace violence is on the rise and so are the costs to the companies it strikes. Major losses in workers' compensation claims, legal fees and awards, medical costs and reduced productivity are just the tip of the iceberg. A company's reputation is also at risk.

Last March, Matthew Beck, an accountant with the Connecticut Lottery Commission, reported for work with a gun and shot and killed four people before killing himself. The incident is just one of many reported on the front page of newspapers throughout the country. While most organizations will never come face to face with such mayhem, violence can and does occur in even the best of companies. And when it does, the financial and psychological costs can be huge.

Most companies are in denial when it comes to the risk of workplace violence, says Gary Salmans, vice president of risk services for Sedgwick of Colorado Inc., Denver. "The first thing victims say after a violent incident is, 'I never thought it would happen here.'" But the unhappy fact is, we live in a violent society in which individuals increasingly use violence to resolve conflict.

In general, there are two sources of workplace violence: external, usually with robbery as the motive, and internal, which includes current and former employees and the friends and families of current and former employees. "This distinction is important because external violence is somewhat easier to address," according to Lynne McClure, president of McClure Associates Management Consultants Inc., Mesa, Ariz. Companies can minimize the risk of external workplace violence by installing security cameras, providing a well-lit workplace, placing adequate locks on doors, and never allowing employees to work alone in a retail environment.

Internal sources of workplace violence are somewhat more difficult to address. "You can do things to minimize potential violence through the physical layout of the workplace, such as installing metal detectors and having adequate security coverage, but it comes down to policy issues," said McClure.

Three factors interact to create an internal violence incident: an employee prone to violence, an organizational culture that encourages (or at least doesn't discourage) violent or aggressive behavior, and the "last-straw incident." The key to prevention is to eliminate some or all of these factors.

Homicide is the leading cause of work-related deaths for men and the second leading cause of work-related deaths for women, according to the U.S. Department of Labor's Bureau of Labor Statistics (BLS). In 1996, homicide accounted for 912 work-related fatalities, representing 15 percent of all work-related deaths, according to the BLS. But homicide is just the tip of the iceberg. The U.S. Department of Justice (DOJ) estimates that each year nearly one million individuals are victims of violent crime when at work. Moreover, some experts estimate that more than half of the violent acts that occur in the workplace, including rape, assault and intimidation, go unreported.

While violent crime in the workplace concerns everyone, it should be of particular concern to financial managers. As guardians of the company's financial health, controllers need to look beyond the tremendous physical and emotional impact of workplace violence to the inevitable monetary costs. "Workplace violence can be as devastating to a company financially as a natural disaster," said Salmans. "But workplace violence is much more likely to occur and, unlike a natural disaster, is predictable and preventable."