Risk management is assessing the risk-reward equation of an organization knowing that the reward should always outweigh the risk. The risk categories for a dedicated trucking company are broad and include things like auto liability risk, worker’s compensation risk, property damage risk, general liability risk and more.
One way to mitigate risk is to purchase insurance that will cover the economic consequences of various business exposures. However, every business must individually determine the comfort level of financial risk it is willing to assume based upon its own risk tolerances — in other words, how much of a deductible is the company willing to pay out of its own pocket if an incident occurs. That number is different for each business and the more risk a business accepts, the lower its insurance premiums tend to be. There is no grid or matrix that tells a business how much financial risk they should incur; every business’s appetite for risk is different and it can change over time.
Businesses can use past performance to help them determine what their risks are. However, past performance does not necessarily predict future outcomes, so historical performance should only be considered as one of the key factors in risk assessment.
One example is assessing risk when hiring new drivers. What is the company’s vetting process and standard hiring procedures? Are you recruiting for and hiring only candidates with a highly favorable safety record and a background which demonstrates professional driving capabilities, is highly compliance-minded and is committed to safety excellence? If so, you are, to some extent, lowering your risk through likely accident-avoidance and limiting possible third-party bodily injury lawsuits. Conversely, if you hire someone who falls outside of your normal hiring parameters and compromise on your strict operational standards, you are subjecting the company to greater exposure and, therefore, higher risk.
One piece of mitigating auto liability risk is spec’ing vehicles with advanced safety systems. However, more and more insurance underwriters expect trucks to be equipped with certain safety features, and a transportation company can end up with higher insurance premiums if it fails to invest in those safety systems.
Collecting accident data is vital in helping a carrier understand and manage risk. However, just having data is not enough; the data must be compiled in useable ways, analyzed and then shared widely internally so that changes can be implemented within the organization to mitigate or eliminate future risks. Once you have analyzed the data, you can address risk issues in your training efforts with drivers and other employees. This continuous improvement cycle known as “Plan --> Do --> Check --> Act” is critical for a company’s risk management program.
Conducting an immediate and thorough investigation following every vehicle accident or work-related injury is imperative. Absent such, it is unlikely that the root cause of the incident will be discovered thereby eliminating the possibility for future prevention. One proven technique is to ask the person involved in the accident or injury what they would do differently, if they found themselves in the exact same situation, to prevent the same outcome from occurring in the future. The message is for the person involved in the incident to take ownership in finding the preventive solution to the original cause of the accident or injury.
Another way to get to the root cause of an incident is to use the “5 Whys” process where you keep asking “why” until you get to the underlying cause of a problem. The 5 Whys technique should be viewed as another continuous learning tool that allows a company to find the root cause of a problem and take action to correct it.
Managing risk in the food supply chain is incredibly important because a lost or damaged load of groceries can have a replacement value exceeding $80,000-100,000 depending upon the product, and that financial expense does not include the less tangible cost of customer dissatisfaction.
A common misconception is that managing a company’s risk is the sole responsibility of one person or one department. To the contrary, risk management through safety assurance is every associate’s obligation. Everyone needs to be empowered to protect the assets of the company and the safety of each employee by pointing out areas that are in need of improvement. The idea of “see something, say something” can help ensure the safety and well-being of a company’s asset whether they are rolling stock assets or human assets.
