Fleet risk management is the process companies use to ensure their drivers, other fleet employees, and vehicles remain safe. It may also include developing contingency plans to mitigate risks when they arise.
A fleet risk management solution protects your commercial drivers and fleet assets — it isn’t just insurance and regulatory compliance.
Done right, a fleet risk management plan can even improve your company’s reputation, elevate client trust, and improve your bottom line.
In this guide, we’ll discuss all that goes into a fleet risk management solution.
What is fleet risk management?
Fleet risk management is the process companies use to ensure their drivers, other fleet employees, and vehicles are safe and secure. This process also includes developing contingency plans to mitigate risks when they arise.
What is the role of a fleet risk manager?
The fleet risk manager is an individual or team who’s responsible for devising and executing strategies that protect drivers, employees, and vehicles. These responsibilities are usually assigned to a separate specialist but can also be handled by the fleet manager.
What risks can your commercial fleet face?
Some potential fleet risks you can encounter include:
- Vehicle collisions and other accidents
- Costly vehicle repairs
- Driver and motorist injuries and fatalities
- Legal, medical, and other liabilities
- Property and asset damage
- Fines and other penalties for violating regulations
- Vehicle theft and highway robberies
- Vehicles getting caught on fire (e.g., when carrying highly flammable items)
- Cargo loss and damage
Any of these risks can damage your brand reputation, result in hefty financial losses, and other potentially business-ending repercussions.
Why is fleet risk management important?
The benefits you can reap by properly managing fleet risks are:
1. Higher returns on investment
Forecasting and averting fleet risks can increase your business ROI.
An effective risk management strategy can prevent foreseeable events and avoidable risk factors (e.g., unsafe driving practices) from causing vehicle downtime, or worse.
By minimizing operational interruptions and boosting your fleet’s performance, productivity, and profitability, you may see increased savings and better allocate resources to other priorities or projects.
2. Lower insurance premiums
Implementing risk management programs shows insurance companies that you’re serious about mitigating risk and protecting your fleet.
By reducing the likelihood of your insurer having to process claims (including third-party claims), you’ll have a more favorable risk profile, which often leads to a reduction in premiums.
3. Reduced business liability
Should a driver cause an accident, you could find yourself in a potentially business-killing legal battle. Many lawsuits today result in what has become known as “nuclear verdicts” with hefty fines and stiff penalties.
Legal issues can taint the marketplace’s, along with your shareholders’, perception of your company’s reputation since they see litigation risk as liabilities. Demonstrating your fleet safety and litigation risk reduction efforts makes your enterprise look more worthy of funding.
4. Heightened work focus
Establishing fleet risk management procedures keeps your drivers, dispatchers, technicians, and other staff focused on fleet safety.
A focus on risk creates a safety-first culture and compels everyone to take extra precautions in all their activities — be it driving, checking for defects, planning routes, and more.
You can also use this focused approach to risk management as a way to incentivize your teams to be safety-focused. Highlight positive compliance reports, give bonuses to individuals who improve or put safety first. This gives everyone in your organization a chance to participate in this culture of safety, a stake in solidifying their sense of ownership, and keeps your employees and fleet from harm.
5. Less reliance on guesswork
When establishing a fleet risk management strategy, you can specify potential threats and create solid plans to prevent them.
Use industry-related statistics and your fleet’s performance data to predict possible risks. This helps other team members anticipate the risks they may encounter and adjust their workflows and budgets.
As you roll out your fleet risk management strategy, you can periodically evaluate your efforts and assess the value of the expenditure, then adjust according to your observations and insights.
How to run a fleet risk assessment
A fleet risk assessment entails following these steps:
- Look closely into your operations and other issues that can harm your fleet.
- Evaluate your safeguards’ effectiveness in preventing fleet damage.
- Frequently review and study your findings, and incorporate them into your fleet risk management program.
Elements of fleet risk management
A fleet risk management plan usually includes these elements:
Transportation laws aim to promote safe driving practices and penalize those who break the rules. Complying with all legal requirements helps reduce risk.
Regulations that must be adhered to are the ELD mandate, Hours of Service (HOS) rules, and other laws by the U.S. Department of Transportation (DoT) and Federal Motor Carrier Safety Administration (FMCSA).
It’s a fleet manager’s responsibility to stay up to date on all laws and regulations to avoid violating rules and incurring penalties.
Real-time and historical risk-related data should always be part of your fleet risk management plan.
Collect, record, and analyze critical data, such as:
- Vehicles’ manufacturing and operational information (e.g., engine models, the year it was manufactured, vehicle inspection and maintenance reports, defects discovered, repairs undergone, etc.)
- Drivers’ employment and health profiles (e.g., license details, medical records, certificates, training sessions completed, competencies, etc.)
- Violations committed (e.g., registered under driver’s or business’ name)
- Accident histories
Note: While fleet safety risk data should always be accessible to managers, all sensitive data must remain confidential.
Vehicle inspection and maintenance
Constant monitoring of vehicle conditions helps ensure the safety of the fleet and lengthens the lifespan of your vehicles and/or machinery.
Implement preventive and predictive maintenance, including repairs, regular servicing, and replacement of defective vehicle parts.
Complete your electronic driver vehicle inspection reports (or DVIRs, mandated by the FMCSA) and keep detailed, historical maintenance records for every vehicle.
Driver training and coaching
Drivers play a vital role in reducing risks. Thoroughly train and onboard new drivers in your risk management procedures. Observe and evaluate drivers’ performances and retrain as needed.
Insurance is required. Purchase enough coverage to cover loss and property damages. Also consider policies that cover repairs, vehicle replacement, driver’s medical bills, etc.
Fleet risk managers must set up incident management procedures should accidents, vehicle thefts, robberies, and similar incidents occur.
A fleet risk manager must determine and establish preventive, predictive, and reactive protocols, including any public relations campaigns if needed.
Safety culture in the company
Part of a fleet risk management program is creating a company culture of fleet safety and risk mitigation.
You can do that by:
- Enforcing driver and vehicle safety policies and procedures (with penalties and disciplinary actions for violations)
- Providing driver education, training, and coaching
- Creating reward and recognition schemes
- Launching internal awareness campaigns
- Distributing driver safety handbooks
- Establishing organizational accountability
- Conducting periodic risk assessments
- Sending regular fleet risk reports to the Board of Directors
Motor fleet risk management guidelines
Follow these guidelines for an effective motor fleet risk management program.
- Assign a fleet risk manager to oversee all related programs and initiatives.
- Stay informed about common and modern fleet risks.
- Watch out for new, ongoing, and potential safety risks to your fleet.
- Create a fleet risk management policy.
- Perform risk assessments to pinpoint and quantify levels of risks and exposure.
- Set up and enforce procedures to eliminate and regulate identified fleet risks.
- Train commercial drivers and other relevant personnel to mitigate safety risks.
- Record and analyze data on fleet risk and compliance.
Fleet risk management solutions
Use advanced technologies to simplify and bolster your fleet risk management efforts.
For instance, leverage telematics solutions that integrate with engine systems, dashcams, and other connected devices. This way you can capture vehicles’ and drivers’ performance information (and footage) and determine whether they’re operating safely.
Global positioning system (GPS) trackers can reveal your vehicles’ whereabouts and give you significant insights into their activities.
You can also use geofencing features to alert you when vehicles go beyond or enter your operating zones. GPS information is also useful for planning routes and schedules and proving regulatory compliance.
Fleet management software also centralizes information from all connected tracking technologies. A better software package can generate customizable reports and provide in-depth performance analytics of your fleet’s overall safety condition, compliance issues, and potential threats.
There are options when it comes to fleet management solutions. If you’re looking to purchase robust fleet management software, choose one that’s intuitive and easily accessible for your managers and commercial drivers.
Additionally, the software should have automation features, functionalities powered by artificial intelligence (AI). These systems are hyper-efficient and give you a better return on investment.
An example of comprehensive software with fleet risk management solutions is KeepTruckin. It has ELDs, telematics, GPS, AI dashcams, fault code alerts, maintenance reminders, driver scorecards, and other fleet and risk management functionalities.
By using an all-in-one platform such as KeepTruckin, you can harmonize your fleet compliance and risk monitoring and reporting tasks.
Bolster your fleet risk management efforts
Risk management is critical to commercial fleets of all types and sizes.
Implement a robust risk management program and keep enhancing it based on the data and insights you obtain. The sooner you systematize your fleet risk management efforts, the sooner you can reap its benefits.