Why It Matters
Risk reduction and denuclearization is not solely the responsibility of safety and risk departments. Every department can – and must – act within their powers to reduce exposure to liabilities.This is even more important in an era of deductibles/retention and captives. The all-out effort in every department protects the public, preserves company profits, and deflates an existential threat.
What’s the Problem
There is a misconception that risk is limited to being a safety and risk department problem. Impose procedures. Minimize claims.
Moreover, safety and risk are misconceived as company burdens. They restrict profits. They erode the bottom line. Burdens.
While safety and risk lead to risk reduction, it must be a company-wide effort. Every department can contribute to do what they can to minimize exposure.
Unfortunately, these other departments are incentivized to the contrary. Sales to get loads. Recruiting to fill seats. Operations to route. Maintenance to keep wheels turning.
All these functions have elements of risk. Yet few companies incentivize, let alone focus, on reducing these risk-bearing elements. In today’s environments, it is a “must” to do so.
What Can Be Done
Safety and risk is not just external, addressing interaction with the motoring public and billboard lawyers. It is also an internal endeavor evangelized to all departments:
- Sales: Risk-based pricing. Load pricing is market drive. But that pricing cannot ignore risk. The risk inherent in a load that goes to a litigious or accident-fraught location.I have clients that lament the costs of cases in “hellhole” jurisdictions. Yet, they priced the load to that location priced for less risky locations.
Sales must fulfill that role. Loads must be priced for the potential exposure. Or declined if the price does not factor the risk.
I know, easy for me to say as an attorney. But I’ve seen the alternative and the losses suffered by the failure to include risk or exposure in the pricing calculation.
- Recruiting: Exposure starts with drivers. Their actions, and their pasts, are potential detonators.“Filling the seat” indiscriminately feeds the frenzy of the billboard attorneys. As I’ve said before, for them it’s not about the accident, it’s about the company. Systemic failures.
Questionable (dubious) hiring lobs them a soft one. The billboard attorneys can attack the company for hiring an unqualified driver to operate an 80,000-pound truck among the motoring public.
The defense starts with hiring. Qualified drivers. Defensible backgrounds. Training to address deficiencies.
Again, easy for me to say. But I’ve seen the alternative…and what it costs.
- Operations: How can operations reduce risks? They just direct traffic.Answer: A lot. First, driver management is vital — hours of service, fatigue, weather … all of these are potential detonators.
Second, routing is risk-related. Telematic companies provide insight into the most dangerous roads, days of the week, times of day. These are invaluable insights that can minimize risk if employed in routing.
And one of the largest recent verdicts included an argument that weather should have been considered in routing.
Third, detention time. The American Transportation Research Institute’s recent study found increased risk when there is excessive detention time. Not just rushing to make up time, but even en-route to get the load.
- Maintenance: Functioning vehicles reduce risk. Not just by avoiding failure-caused accidents, but by minimizing driver distraction and rushing due to lost time.Plus, post-accident inspections that reveal pre-accident defects are fodder for the argument of billboard attorneys that there is a systemic failure that requires a big verdict. “The company couldn’t even keep their vehicles compliant. How do you think the rest of the company operates?”
The Big Thing
Multi-departmental safety and risk requires one overarching commitment: A safety culture. It starts at the top. With the folks who are responsible for, judged by, and profit from the bottom line.
In my current presentation, “Safety Profit,” I preach the message of this full-court press by the entire company and all departments to protect profit – and the company itself. Management must buy in and make clear their commitment to the message.
When that happens, safety and risk are no longer a burden. They are a profit. Keeping money on the bottom line by stemming the hemorrhage.
Bottom Line
Safety and risk will determine your bottom line. But all departments can and must contribute. Make sure this message reaches all and is effectively enforced. |
