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The Importance of Risk Management in Motor Fleets

“Here we go again – ‘Risk Management’ – another meaningless phrase. Let’s run it up the flagpole and see who salutes, then add it to the Corporate Buzz Phrase Bingo card for the next Teams meeting.”

Actually, risk management is important for the continued existence and financial well-being of most organisations. Without it, unless they’re very lucky, the enterprise will succumb to some practical or financial disaster from which it can’t recover. Risk management is the art of predicting and planning for these corporate banana skins.

There are several ways of handling risk – avoidance, retention, transfer, sharing, reduction and prevention. The good news is, you’ve already made a start. Reading Hubb blogs is a limited form of risk management, as our blogs are usually aimed at precautions to reduce risk and then transfer it to insurance companies. However, insurance is only a part of the wider topic of risk management. In a motor fleet context, avoidance could be a courier firm replacing motorcycles with vans to avoid the high risk of motorbike accidents.

It’s not only the risk of accidents that businesses face but economic and financial risks. Shareholders, lenders, creditors and customers all have an interest in a business remaining solvent. A series of high profile collapses in the 80s culminated in the collapse of global bank BCCI (Bank of Credit & Commerce Intl) and Robert Maxwell’s empire in 1991. They were unrelated except that both collapses had their roots in financial fraud and mismanagement.

In December 1992 the Cadbury Code was introduced, so it’s been around almost 30 years. It sounds as if it should be dark chocolate, hiding something indulgent, like martini-soaked raisins, for your taste buds only and NSFW (not safe for work). In fact, it’s very safe for work, and surprisingly important for companies. It regulates corporate governance and standards of financial auditing and is the main reason non-compliance is a major risk for companies.

Corporate regulation is increasing and with it the risk of non-compliance. One sensible method of risk reduction in this area would be to upgrade from a bookkeeper doing payroll only to a full accountant who can warn of potential non-compliance and advise on forthcoming regulatory changes. Another would be to retain a lawyer to oversee non-financial regulatory matters. These would be a combination of risk reduction and risk-sharing.

In the fleet manager’s office compliance is an umbrella covering vehicles, drivers, operations and management.

Vehicles include those owned or leased by the company and private vehicles used by employees in the course of employment. All must be insured, taxed, MoT’d (if over 3 years old) and serviced.

Employees are responsible for these matters for private vehicles, but the prudent fleet manager will maintain records and seek confirmation that the necessary certificates are in place. A failure to do so could expose the company to contingent liability. This is a form of risk prevention.

Vehicles used for employment are “workplaces” to which much legislation applies. Owned or leased vehicles require risk assessments. Is the workplace easily accessible for driving, loading & unloading? Is equipment required – sack barrow, pallet truck or even piggy-backed fork-lift truck? Or a driver’s mate? Is it noisy in the cab, often located directly over the engine? For long-distance vehicles is the driving position comfortable and adjustable?

Drivers must be licensed according to the vehicles they operate, and records must be maintained of permitted vehicle classes and expiry or re-test dates. Are drivers fit and healthy? The failure to thoroughly check a driver’s references, health and employment history led to the Glasgow bin lorry crash in December 2014. 6 pedestrians died and 15 were injured. The litigation is still in progress almost 7 years on.

Training is vital. Not only driver-specific training for special licences such as HGV, PSV or PCV, but basic EL (employer’s liability) training for “6 pack” compliance.

Operations compliance risks include the fitting, maintenance and monitoring of tachographs. This leads on to drivers’ working hours, breaks and rest days. The “6 pack” includes requirements for a safe workplace, safe systems of work and appropriate PPE – long before that term conjured images of masks and hand sanitiser.

How are jobs allocated or routes scheduled? Are the schedules achievable? In April 2021 Amazon suffered reputational damage when it came to light their delivery schedules were so tight that drivers had no time for toilet breaks and were peeing in bottles. Another job for the conscientious fleet manager.

Most of these examples are principally risk prevention. Compliance avoids the risks attached to non-compliance – fines, shutdowns, legal costs, reputational damage – but many have the secondary effect of reducing the risk of physical accidents or illnesses.

The final compliance category is management. This may extend above the fleet manager’s pay grade, but he has a responsibility to let senior management know of shortages of resources, such as vehicles, equipment or personnel. There needs to be a budget for training. Even basic in-house training involves the trainees not carrying out actual work for the duration of the training. Schedules will have to be adjusted or additional staff hired in to cover. The risk assessments have to be maintained and updated when systems changes or new vehicles or equipment are delivered.

After a scheduled break, the hard-pressed fleet manager turns his attention to accidents. These may be vehicular or on the premises. Mechanics and fleet administrators slip, trip, wrench their backs and drop heavy things on toes as much as anybody else.

Provided statutory motor vehicle and EL policies are in place, they are examples of risk transfer. The uncertain cost of an unknown number of accidents is replaced with the known premium costs. The first step is to ensure that the fleet insurer has up-to-date information about the fleet – numbers and types of vehicles.

The fleet manager should be monitoring claims, on the lookout for patterns that may indicate a training need or a scheduling/resourcing issue. Dash-cams have become widespread. They are a useful and cost-effective tool for gathering information or evidence about accidents.

Thefts of and from vans have been covered in a previous blog, and the fleet manager is responsible for minimising the risks. Vehicle alarms, immobilisers and trackers can all contribute to reducing the risk. Routing & scheduling can be adjusted to maximise the number of vehicles overnighting in a secure depot or compound, rather than kerbside on the street or at motorway services.

A busy fleet will inevitably rack up fines and penalties for various things – speeding, parking, bus lane use, entering congestion zones without a paid pass are but a selection from an extensive buffet. These are not insurable and so must be monitored to minimise their occurrence by driver training or amending routes and schedules to avoid problem areas.

It should be clear from the foregoing that risk management is a central plank of the raft that a fleet manager paddles furiously through the white-water rapids of a busy fleet office. By careful planning, he can avoid being without a paddle up a particularly noxious creek

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