Managing risk is one of the most important functions any company assumes. Risk can take any number of forms: the risk of liability for faulty products, financial risks of investments and debt, or the risks posed by hiring new employees.

It is that last risk that concerns fleet managers. Hiring employees who will be entrusted with the possession, care, and operation of a company vehicle worth thousands of dollars is a serious responsibility, one which, if done carelessly, can end up costing the company substantial amounts of money. The following are some processes and tools a fleet manager can use to identify at-risk drivers.

 

Considering the Risk Factor

Many of the risks drivers pose are fairly obvious. Improper or reckless operation goes under that heading with the following:

  • Safety. There is no small number of employees who operate a company vehicle in an unsafe manner, placing themselves and others at risk, not to mention the possibility of physical damage.
  • Security. Every year, companies suffer losses related to stolen or vandalized vehicles.
  • Efficiency. Drivers can take a cavalier attitude toward the vehicle. If they aren’t responsible for paying for it, they may be negligent in caring for it.

Fleet managers must be vigilant about these risks on a day-to-day basis. However, safety poses the greatest range of risks.

 

Assessing Safety Risk

Operating a company vehicle is a serious responsibility, but unfortunately one that most fleet drivers do not take as seriously as they should. While operated in an unsafe or cavalier manner, company vehicles pose a range of risks to the company, the driver, and the public. These risks include:

  • Physical Damage. The obvious and most common risk in operating a fleet of vehicles is physical damage. From parking lot fender- benders to serious crashes, the costs of repairing a company vehicle damaged in an accident can run a large repair bill, not to mention the possibility of total loss.
  • Personal Injury. Drivers are injured in accidents every day, costing the company downtime, no matter how minor the injury may be. Minor cuts and bruises might cost a day or two, with a more serious injury resulting in weeks or even months of driver absence. In addition, serious injuries impact the company’s risk rating when insurance renewals are negotiated, potentially incurring thousands of dollars in additional premiums.
  • Liability. When other parties are involved, the risk of liability for both property damage as well as personal injury is substantial. The company may be held liable not only for repairs to third-party vehicles, but also for injuries. In most serious cases, including and up to death, punitive damages can run into the millions.
  • Reputation. When a company is held liable for damages resulting from an accident involving one of its vehicles, the damage to its reputation in the community and the marketplace is real.
  • Assessing the risk a driver poses begins at hire, and the single-most useful tool in doing so is the motor vehicle report (MVR). Before hiring an employee who will be given a company vehicle, a state MVR should be obtained and reviewed. This not only gives the company a snapshot of the candidate’s driving record, but also confirms that a valid license exists. Companies are often shocked to find that one or more of their drivers don’t have a valid license. The MVR reveals various levels and types of violations:
  • Equipment violations. Broken lenses, burned out bulbs, nonfunctioning signals, etc.
  • Permit violations. Expired registration, inspection, or license.
  • Traffic rule violations. Moving violations such as failure to signal, illegal lane change, failure to obey traffic controls (lights, signs), etc.
  • Moving violations. Infractions such as following too closely, speeding, reckless driving, DUI, and other serious violations.

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Classifying Aftermath of Risk

Assessing the risk of these violations begins with creating a hierarchy from the least to most serious. For example:

Level I – Equipment or permit violations.

Level II – Traffic rule violations.

Level III – Serious moving violations, such as following too closely or speeding 25 mph or more over the speed limit.

Level IV – Critical moving violations such as DUI, speeding 25 mph or more over the speed limit — signs of reckless driving.

This is an example of how a fleet manager can use the MVR to assess the level of risk a driver may pose. The next step is to determine how to deal with the presence of one or more levels of violation.

For new hires, as an example, a Level I violation might not reveal a very high level of risk. Equipment violations are often mere oversights, or a case in which the driver was cited before and had an opportunity to correct it.

Level II violations reveal a slightly higher level of risk. Minor traffic rule violations are a "gateway" to more serious ones, particularly if there are no clear consequences beyond the payment of a fine. Drivers with such violations should be put on notice that if there is a recurrence, their company car privileges may be suspended.

Levels III and IV reveal far greater risk and the consequences should reflect this. If hired, a driver with a speeding violation or a DUI should not be provided a company vehicle for a significant probationary period (six months for a Level III, one year for a Level IV, for example). They might be reimbursed for the use of a personal vehicle until the period has expired with no further violations of any kind.

 

Handling Current Employees

Handling existing company vehicle drivers differs slightly than new-hire procedures. The consequences are applied in "midstream" during employment. Fleet managers should obtain and review MVRs for all fleet drivers at least once or twice a year. Violations can occur at any time and may reveal previously unaddressed risk. Risk assessment should be a regular part of a fleet management regimen.

Keep also in mind that in many cases, the employee may not be the only driver. If the company permits personal use by licensed family members or any others, MVRs should be reviewed for these individuals as well, and the driver held responsible for any violations that appear.

Whatever policy is used and however the levels of risk are determined, it is important that drivers know what is expected of them, what will be assessed, and the consequences of violations.

Before any employee is put behind the wheel, the entire policy, including the MVR review, should be provided, read, and signed off by the employee. As with any policy that contains disciplinary action, it first should be reviewed and approved by legal and human resources departments, and given final approval by senior management level.

 

Securing Assets from Risk-Takers

There is always the possibility an employee might pose a security risk to the company, and since a company vehicle represents tens of thousands of dollars in asset value and operating expense, fleet managers must be aware of the risk.

Many companies conduct criminal background checks on new hires, especially if they are entrusted with high-value assets or proprietary information. The security risk a criminal record exposes, vis-à-vis fleet, extends from the vehicle itself to any product or equipment the vehicle carries. Fleet vehicles are stolen every year, some by employees, often when they are terminated for cause. A record of criminal activity should be a red light for any new hire and existing employees.

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Protect the Company’s Interests

Though risk may be an awkward term, the chance exists that a driver may not take seriously the responsibility of caring for a company-provided vehicle. This attitude may result in serious consequences. No "report" can be reviewed for this risk. However, signs can be gleaned by researching a new hire’s background or an existing employee’s work habits.

  • Job Hopping. Though not as stigmatizing as in the past, the inability or unwillingness to stick with a job for any length of time can reveal a person’s carelessness and lack of commitment. This attitude can often be reflected in job performance and in how seriously the responsibility to follow fleet policy and procedure is taken.
  • Job Performance. An existing employee who is late with reports, doesn’t submit expenses promptly, or whose supervisor notes is otherwise sloppy in the performance of duties extends the same attitude toward carrying out fleet policy.
  • Condition Report. These reports can reveal a great deal about how a driver approaches fleet responsibilities. Particularly when signed off by the driver’s supervisor, notations of small issues (dents, rust, burns in the interior, trash and stains, etc.) indicate the driver poses risk of depressing residual value and vehicle performance.
  • PM Exceptions. These reports reveal drivers who are a particular risk in performing regular and timely preventive maintenance.

It is very important to note that delving into an existing employee’s work habits and history carries with it strict legal limitations, primarily due to privacy. Before assessing and acting upon this type of risk, fleet managers should make certain that they have cleared their actions with the company legal and human resources departments.

 

Assessing Overall Risk

One of the most effective methods of keeping a firm hand on fleet expense is to assess and manage the risk drivers pose, both at hire and on an ongoing basis. The primary concern for safety requires regular review of MVRs, to determine first that the driver possesses a valid driver’s license and that he or she has a clean driving record. The risks posed by unsafe driving at any level are enormous.

Determining security and efficiency risks can be more difficult and must be done carefully and with legal and human resources counsel. The job of identifying at-risk drivers and developing a policy and process is one that all successful fleet managers engage. The rewards are substantial.

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