How managing risk can save you money
Rising energy costs, inflation and the conflict in Ukraine have given rise to a tough economic climate – and there are few signs of it improving anytime soon.
As a result, cost-saving initiatives have moved to the top of fleet agendas, with businesses looking to protect their bottom lines. Against this backdrop, there is a danger of risk management dropping down the list of priorities.
What many may fail to realise, however, is that the two objectives – cost control and risk management – work hand-in-hand. Although a risk management strategy incurs costs, the costs associated with not having an effective risk programme in place can be much greater.
Here, we share the ways fleet risk can impact your bottom line.
Behind the wheel
Poor driving behaviour may not be the first thing that springs to mind when looking to save money. But risky driving practices, such as speeding, harsh braking, cornering and distracted driving, can be costly.
Ultimately, it comes down to inefficiency. Poor driving styles invariably lead to more wear and tear, as well as a higher fuel consumption and a bigger SMR (service, maintenance and repair) bill.
It also threatens road safety, increasing the risk of accidents and their associated costs, including repairs and downtime.
Then there are the legal ramifications to consider. Not only might the business be held liable for damages or injuries, there could also be costs associated with defending lawsuits and claims, as well as potential fines and penalties.
The problem is that many drivers are unaware of their bad habits behind the wheel, and do not appreciate the business cost.
Organisations should have an up-to-date road safety policy, ensuring drivers are fully aware of the behaviours expected of them. Telematics systems can have a role to play here, enabling fleets to profile and address risk and giving drivers feedback on their performance in real-time.
Moreover, regular, tailored training to help educate drivers, develop their skills and make them more confident on the road is essential.
In the workshop
Rising inflation, energy prices, increased transportation costs and part delays are just some of the reasons why vehicle SMR costs are on the rise, with industry analysts anticipating further increases of between 10 and 20 per cent.
Fleets with high accident rates are already paying for expensive, frequently avoidable repairs, and if they don’t get risk under control, their bottom line could take an even bigger hit in the coming months. What’s more, downtime from repairs can negatively impact business productivity. The longer vehicles – and drivers – are out of action, the greater the likelihood of revenue loss.
Supply chain disruptions have caused many fleets to reconsider their lease terms, with many extending beyond their stated contract end. An ageing fleet, however, comes with more risk, needing more regular servicing and carrying an increased risk of breakdown.
Daily vehicle checks not only help save lives but are also integral to keeping a lid on costs. Tech innovations, such as Fleet Operations’ MOVE driver app, can digitise the vehicle inspection process, while offering a wealth of wider risk management tools. The MOVE app, for example, includes online safety assessments that profile drivers by risk type and generates bespoke reports on driving style and risk factors. Coaching and e-learning courses, combining videos and interactive content, are then made available to help address areas of concern.
Accident management
The administrative tasks when a driver is involved in a collision can be lengthy. From managing vehicle recovery and insurance claims to arranging replacement vehicles and processing repair invoices, there’s a lot to juggle from start to finish.
Accident management adds to your fleet department’s workload, taking up precious time and money that could be spent elsewhere.
Insuring your fleet
Insurance is a fleet necessity, but premium costs can spiral should road accidents and claims increase.
Organisations should look for ways to reduce insurance costs, such as risk assessing drivers, using telematics data and vehicle camera systems, and implementing driver training programmes.
Having these in place can help impress insurers as they look for evidence of a business’s commitment to reducing their risk profile.
The cost of reputational damage
Without effective risk management processes, an organisation’s reputation could be in the firing line.
We now have easy access to the internet and social media through our smartphones, meaning the reputational damage to your business can be significant if a driver or vehicle displays risky behaviour while out on the road.
Revelations of negligent and irresponsible companies can find their way into the press, and it only takes a minute for someone to upload a negative post about your company and for potential clients to see it and be dissuaded from using your services.
A company with a reputation for unsafe driving may also be perceived as not valuing the safety and wellbeing of their staff. This can lead to a negative perception of the company’s culture, which in turn can negatively impact employee recruitment and retention.
If you’re looking to manage fleet risk, we can help. Get in touch with our experts today to find out more.