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Fleet Management

Fleet Risk Management: What It Is And Why It’s Important

Want your fleet to be safe on the road? Implement a fleet risk management program. Learn why such a plan is important and how to create one of your own.

fleet risk management

Operating a fleet — large or small — is inherently unpredictable. Another driver may back into one of your work vans in a parking lot, or one of your semis may blow a tire. There’s just no telling what will happen on the road.

You can, however, plan and prepare for the worst by setting up a fleet risk management program in your business.

In this article, we discuss why fleet risk management is so important and give you tips for creating a program of your own.

Table of Contents

What Is Fleet Risk Management?

fleet of vans

At its most basic, fleet risk management (FRM) is the process by which a company ensures that its drivers, fleet employees, and vehicles are as safe as possible — both on the road and off.

Fleet risk management also involves the development of plans that help reduce the impact on your business when accidents and other unforeseen events occur.

It all starts with identifying any issues in the current standard operating procedures that could make drivers and vehicles unsafe on the road and then creating a framework of programs and practices that eliminate these risks.

The ultimate goal of all this is to ensure your fleet is safe in all regards, including:

  • Drivers
  • Vehicles
  • Other motorists
  • Pedestrians
  • Property

As we’ll discuss in more detail later on in this article, the core components that any effective fleet risk management program absolutely needs to cover are (1) the day-to-day actions of the fleet, and (2) the compliance under which it operates.

Fleet Risk Management Vs. Compliance

In many ways, fleet risk management and compliance are one and the same thing.

The rules and regulations set up by the Department of Transportation (DOT) and its enforcement organization, the Federal Motor Carrier Safety Administration (FMCSA), help reduce the risks of fleet operation and prevent accidents, breakdowns, and driver errors.

More specifically, fleet risk management and compliance address issues such as:

  • Maintaining safety standards for vehicles of all sizes
  • Implementing technology to improve safety practices
  • Educating vehicle operators about safety regulations that impact the way they drive
  • Reducing threats to public safety on the road
  • Abiding by DOT standards through inspections and other measures

So, if you’re setting up a new fleet risk management program or revising an existing program, always start by reviewing local, state, and federal compliance laws to make sure your business is operating according to the letter of the law.

Why Is Fleet Risk Management Important?

fleet risk management

1) Keeps Drivers Safe

One of the most important aspects of fleet risk management is driver safety.

A strong FRM program protects not only your drivers, but other drivers on the road as well, and prevents driving behaviors — such as tailgating, late braking, and speeding — from becoming issues that could put lives in jeopardy.

2) Helps Your Business Avoid Legal Issues

If a vehicle in your fleet fails any of the Commercial Vehicle Safety Alliance’s (CVSA) compliance checks, the DOT and FMCSA can:

  • Impose hefty fines on your fleet
  • Remove the vehicle(s) from service
  • Take legal action against your business

You can avoid these issues by implementing a fleet risk management program that satisfies all local, state, and federal laws.

3) Saves Money

Fleet risk management also saves you money.

It helps your fleet avoid fines for failing compliance checks, helps keep your insurance premiums as low as possible, and allows you to redirect money that might go toward accident repairs to other parts of your business.

4) Strengthens Brand And Public Reputation

Brand recognition may not seem like a critical component when you’re focused on the day-to-day operations of your business, but maintaining a reputation for safety goes a long way toward improving the way the public perceives your company.

If your company is known for being detail-oriented, that translates to higher trust with the customer, especially since fleet risk management helps serve customers in a timely manner.

How To Implement Fleet Risk Management

virtual view of a freeway

1) Maintain Compliance

As we’ve mentioned several times already, a big part of fleet risk management involves abiding by all local, state, and federal laws.

The first step that every fleet manager should take when it comes to risk management is maintaining compliance at all times.

You can research the details online, or, if it becomes too much, consult with an attorney who is familiar with your business and where it operates. They can help clarify the information so you can incorporate it into your business and pass it on to your drivers.

2) Identify And Monitor Areas Of Risk

After you set fleet risk management procedures that help maintain compliance, you can turn your attention to specific areas of risk within your business itself.

Perform a thorough examination of your standard operating procedures and identify the areas with the most potential for accidents. Similarly, examine driver behavior and identify habits and activities that could lead to problems in the future.

Once you’ve identified the problem areas, implement solutions and then monitor for improvement.

3) Purchase Insurance

All vehicles must be covered by some type of insurance before they’re legally allowed to operate on the road. Running a fleet without the proper insurance is illegal and can get your business in serious trouble.

That said, don’t settle on the first plan you see. Research different companies and options to see which one gives you the best coverage and the best price.

4) Install Telematics

When it comes to fleet risk management, one of the best ways to gain insight into what’s going on while your vehicles are on the road is through telematics.

Telematics is a set of systems and add-ons that use the Global Positioning System (GPS) and on-board diagnostic (OBD) equipment to plot a fleet vehicle’s movement on a computerized map.

Once you’ve installed the components, the telematics hardware processes and analyzes a vast array of information about the vehicle, including:

  • Position/location
  • Speed
  • Distance traveled
  • Total mileage
  • Trip time
  • Idling time
  • Harsh braking
  • Rough driving
  • Seat belt use
  • Fuel consumption
  • Engine data
  • System faults

The onboard computer then transmits the data via a cellular network into fleet management software where you can view and export reports, gather intelligence about your fleet, set performance and safety benchmarks for your drivers, and much more.

5) Track And Control Fuel Costs

person filling up a fleet vehicle

Tracking and controlling fuel costs is another way to gain insight into vehicle condition and driver behavior.

For example, if the MPG in a vehicle goes down when a certain driver takes the wheel, you may begin to suspect that either something is starting to go wrong with the vehicle itself, or that something the driver is doing is causing the vehicle to use more fuel.

Armed with that information, you can take steps to repair the vehicle or remedy the unfavorable behavior — all with the goal of reducing fuel consumption and spending.

6) Train Drivers

Don’t leave your fleet risk management program to chance. Train your drivers to operate within the limits of the program at all times.

Include such protocols as:

  • Proper driving technique
  • On-the-road vehicle monitoring and maintenance
  • Risk mitigation
  • Loading and unloading
  • Local, state, and federal compliance
  • Record keeping

Keep in mind that training isn’t a one-and-done thing. Periodic retraining is essential for the overall safety and success of your drivers, your fleet, and your business as a whole.

7) Create A Plan For Emergency Maintenance

Setting up an emergency maintenance plan before such an event occurs is crucial for the successful operation of your fleet risk management program.

Issues, such as flat tires and damage from poor road conditions, can seriously hinder the operation of your fleet.

But you can reduce the risk that these events will put a vehicle out of service for too long by having an emergency maintenance plan in place and executing it as soon as the need arises.

This will save time and money that might have been spent trying to secure repairs and other services on short notice.

Not All Fleet Risk Management Programs Are The Same

It’s worth noting that not all fleet risk management programs are the same. While all programs must work to maintain compliance, some, for example, may choose not to install telematics. It depends on what works best for your business.

As long as your fleet is abiding by local, state, and federal laws (including compliance issues and insurance coverage), you can create a risk management program that is different from all the rest.

Risk Management Made Easy

Fleet Risk Management Made Easy

However you choose to implement fleet risk management in your business, the best way to manage fuel use and control the costs associated with keeping your vehicles on the road is by using Coast.

The Coast fuel card provides controls and visibility that work for your business, as well as an online expense management platform that empowers you with real-time information related to your fleet.

For more information on how Coast can help you control fleet costs and streamline your fleet management program, visit CoastPay.com today.