Why Risk Management Is Essential at Your Fleet Operation

Why Risk Management Is Essential at Your Fleet Operation

A fatal accident occurred at a trucking operation Jeff ran.

A driver was cresting a hill, with the sun in his eyes, when he rear-ended a car just over the hill that was sitting on the highway waiting to turn. A woman was killed, and her son was permanently disabled. It was an accident anyone could have gotten into, and the driver might not have even been at-fault – except he was on cocaine.

The trucking operation did what it was legally required to do – that same driver had taken, and passed, a random drug test a week before the accident. But at the time of the accident, he was tired – he’d been up for 30 hours (not driving, just not sleeping) – and took cocaine to stay awake.

The operation didn’t know the driver was sleep-deprived, or they wouldn’t have given him a load that day. But the damage was done. The insurance company dropped them. They received a bid from another company for quadruple the previous premium. As a result, the owners decided to shut down the operation.

One bad decision by a driver resulted in the closure of an entire operation, and more importantly, the loss of a life.

This is why risk management — the proactive process of identifying, assessing, and controlling the threats to your organization and stakeholders — is crucial to your fleet operation’s success.

Jeff Jenkins and Josh Turley discussed the importance of risk management during Episode 5 of “The Fleet Success Show” podcast.

Unfortunately, the risk of fatality is a real problem fleet managers need to confront each day. Because of this, it’s essential to identify and assess risks and determine how big of a threat they are to your operation.

The hard part, as Jeff discussed in the podcast, is you don’t always know what accident you’re preventing. You can put policies in place and ensure employees follow safety procedures, but you’re doing it to prevent an unknown mishap, to save an unknown life, or prevent a lawsuit for an unknown amount of money. But the important part is those events didn’t occur, and that’s the payoff.

Be Proactive vs. Reactive

The most important word in our risk management definition is the second one – “proactive.” The key to preventing some risks at your operation is to get ahead of them and address them proactively instead of reacting to issues after they occur.

Some proactive measures you are likely already taking at your operation are preventative maintenance services and pre-trip vehicle inspections. Doing these allows your operation to find vehicle defects and issues early, before they cause breakdowns or result in costly road calls.

Listen to the full podcast episode for more tips on being proactive.

Know the Risks

Josh and Jeff also discussed the importance of knowing what risks are threatening your operation. If you don’t know what threats you are facing, you can’t prevent them.

Jeff said he worked a trucking company where they spent $20 million a year in rear-end accidents between the repairs, insurance costs, lawsuits, and other expenses. To prevent these, they purchased collision-avoidance software for their trucks. It was a large up-front expense – it cost around $8,000 per truck – but it paid off. With the software, they were able to reduce their rear-end expenses to $1 million.

Jeff looked at the metrics at his operation, identified the problem, and found a solution.

Josh gave another example of preventable accidents – collisions in your parking lot. If your fleet vehicles are frequently running into each other when backing out of the parking lot, then it can make sense to put a new policy in place to have drivers back their vehicles into their parking spots to avoid collisions. This won’t eliminate all accidents, but it can help prevent some collisions that are typically very avoidable.

Take Safety Precautions

Another important way to prevent risks in your operation is to take safety precautions. With new technology available, there are countless measures you can take at your operation. Josh and Jeff dove deep into this topic in the podcast.

One example that Jeff gave was putting cameras in the trucks at the operation he ran. It was a large expense, and his drivers hated it, but it helped his operation identify risky driver behaviors. And, it helped the operation reduce their safety costs by 20%. While this was a large savings, the even bigger benefit was the prevention of countless accidents the cameras helped drivers avoid.

Another example Josh gave was being OK to let unsafe drivers go – even during a driver shortage. It can be tempting for operations to hang onto drivers, even if they pose safety risks, just because they are afraid they won’t be able to replace the person. But, think of it this way – on average a driver might make the company $200,000 a year. However, one bad accident can cost the operation millions of dollars. So, is it really worth it to keep the driver on your staff?

As Josh said, this is a low-reward, high-risk situation. The benefit to keeping the driver is low, but the risk he poses to the operation is high. Part of mitigating risks at your operation is to identify these situations and determine if the worth outweighs the risk.

To listen to Josh go into further detail about low-reward, high-risk situations, and talk about the concept of Productive Paranoia, listen to the full episode of the podcast.