Holistic risk management

Chris North gives his thoughts on holistic risk management in the haulage industry and explains that logistics companies must start to look beyond driver training and basic claims analysis and start to embrace other more in depth methods of risk management.

To some involved in the road haulage fleet insurance sector, the term 'risk management' may still mean little more than driver training and claims analysis. Whilst those can be helpful steps along the path of risk improvement, arguably such measures fail to fully recognise and address some key issues that can have a catastrophic impact on the well-being of not simply truck drivers but various key stakeholders including other road users - and insurers.

Behaviours that driver training may only temporarily address includes distraction risks such as eating, smoking or using a mobile phone, tailgating the vehicle in front, overly-fast, harsh or poorly-executed manoeuvres and driving in an aggressive manner. Perhaps of even greater concern is the fact that driver training can completely overlook a range of fatigue-related issues.

Claims analysis to spot a variety of trends has been going on for years. Analysis that spells out the names of those drivers whose accident record is below average may tell an operator little more than he or she knows already. Following that analysis up with driver training programmes can help - with a little coaching, almost all truck drivers can turn in an adequate performance during the course of a typical in-cab driver training session. But what happens once the initial post-course euphoria has evaporated or once a driver is back behind the wheel away from the watchful eye of a driver-assessor or instructor?

But in today's tough economic climate with the road transport industry hit as hard as any, the question many haulage operators will be asking themselves is whether spending time and money making their drivers safer should be seen as an expense that can be saved when times or hard or an essential investment regardless of recession. Progressive haulage companies will already recognise the benefits of running a safe fleet. Those that have yet to recognise the benefits of risk management perhaps overlook the fact that a carefully designed programme that tackles all the key issues does not simply benefit truck drivers and other road users; it can significantly benefit their own business:

  • Safer driving can yield substantial fuel bill savings as well as economies through reduced tyre wear, less truck and driver down-time and less management time wasted dealing with disrupted delivery schedules

  • Cutting accident frequency and severity should lead to lower insurance premiums, a cut in uninsured damage and a marked reduction in the risk of brand damage resulting from a fatal accident involving a liveried vehicle

  • It helps fulfil their responsibilities from an occupational road risk perspective thereby also significantly reducing the risk of a successful manslaughter or corporate manslaughter prosecution following a fatality

The 'holy grail' is a crystal ball that spots who's going to have an accident - before the accident happens. Certain organisations have come close to developing that crystal ball using sophisticated information gathering devices and predictive modelling techniques to analyse driver behaviour and compare it with a historical basket of data in order to predict whether a driver is more or less likely to have an accident than the 'average' truck driver. The concern though is such a process may lead to 'paralysis by analysis' as well as perhaps being impractical in an industry where driver turnover can be a significant issue.

So how can a haulage company best roll-out, and realise the benefits of, risk management in harsh economic times? Arguably what customers need most today are a series of logical steps and affordable solutions that help them down the path of transforming their business into a safe - and at the same time more profitable - operation.

Key to risk improvement is a top-down management culture that places safety at the heart of the business and at the same time embraces the often-neglected need amongst drivers for appropriate recognition and reward in return for adopting behaviours that support a culture that places road safety firmly at the heart of their operation. Without that management culture, drivers will quickly realise that their bosses are simply ticking boxes or paying lip-service in order to give their business a 'safety wash'. If a driver training programme is rolled out in a fit of enthusiasm, then forgotten about by management, drivers will just as quickly forget about or ignore what they have learned. If technology that can report on driving style is installed in every vehicle, perhaps at considerable expense, but the data captured is never used, drivers will soon revert to type. So the first key step is to get that management culture firmly in place.

Crucial too is the need to carry out a comprehensive risk assessment that carefully considers every aspect of risk affecting their drivers as well as their other staff. From an occupational road-risk perspective, it's essential that the risk assessment does not ignore the risks posed by driver fatigue. Crash-related risk factors that drivers' hours regulations arguably do little to address includes a range of fatigue-related issues such as the risks posed by shift work patterns that overlook 'body-clock' issues, an overly-demanding delivery schedule with little room for delays or potentially life-saving naps, the risk posed by a driver not knowing what best to do, or not being allowed to take appropriate action, in the event of becoming excessively sleepy whilst driving, and the risk of a driver having a serious sleep disorder with potentially fatal consequences - a significant risk within the haulage industry. Once the risk assessment has been completed, an appropriate action plan that prioritises and addresses the issues identified needs to be drawn up and rigorously implemented.

Drivers themselves need to have the necessary skills and awareness of what behaviours underpin safe - and consequently fuel efficient - driving. That's where traditional driver training programmes can play a vital role. But once drivers understand the behaviours that lead to safe and fuel-efficient driving, they need an appropriate incentive programme to encourage them to put the skills they've learned into lasting practice. As well as rewarding safe and fuel efficient driving, such programmes require desirable outcomes to be clearly defined - outcomes such as achieving a defined period of crash-free driving or achieving average monthly fuel economy targets.

Finally, consideration should be given to sensitively deploying appropriate 'telematics' solutions designed specifically to monitor driving style and behaviour. It's important to remember that such devices are not quick-win 'silver bullets'. Deployed in isolation, they are no more likely to transform a sub-standard risk into a star performer than any other tactical 'quick-win' device or initiative that ignores the need to put in place a management culture that places safety at the heart of the business, that overlooks the need for risk assessment, that does not take into account the need to ensure that drivers have the necessary safe and fuel-efficient driving skills, and that fails to see the need for driver recognition and reward in return for displaying appropriate behaviour.

Bearing in mind the wide range of telematics systems being used within the haulage industry, not just amongst different companies but sometimes from an intra-company perspective too, careful consideration is needed, and well thought out solutions are required, if consistent information is to be gathered whilst at the same time avoiding costly duplication of technology. That means the chosen solution needs to be complimentary to an operator's existing 'black box' system or systems as well as being able to quickly and easily provide easy-to-understand information that supports driver coaching and, where necessary, the devising of focussed re-training programmes to meet the needs of specific individuals.

Given it's insurers that are left to pick up the potentially very serious financial consequences of a fatal accident involving a truck, it's no surprise risk management is a much-used term in the haulage insurance industry. Truck insurance programmes under-pinned by risk management measures designed to comprehensively and lastingly address the risks posed by inappropriate driving style and behaviour offer the potential to transform even the largest trucks into some of the safest vehicles on the road. But if the full benefits of 'risk management' are to be realised, it's important for insurers and brokers alike to keep in mind there are no 'silver-bullets'. What is needed instead if real and lasting benefits are to be achieved are holistic solutions that customers have embraced in their entirety - culturally as well as practically - and demonstrably put their weight behind from the top of the company down.