Risk Management

For firms that operate a fleet or expect employees to drive any vehicle as part of their job, risk management must be viewed as a necessity rather than an option.

The advent of cash for car schemes in recent years may have led employers to believe that their duty of care has been conveniently offloaded. This is a misconception, if employees drive as part of their occupation however low the mileage the firm has a duty of care.

Responsibility

The stark reality for companies is that they risk a potential prison sentence if they do not manage their fleet properly. If a firm’s actions - or lack of them - are deemed to have contributed to the incident, company representatives may be charged with manslaughter.

Prison sentences aside, the costs of not following the disciplines of a risk management programme can be crippling. For instance a UK firm faced £9million in damages after one of its drivers ran over a cyclist while using a mobile phone. The cyclist was left paralysed from the neck down and was confined to a life support machine.

Looking beyond legal requirements, there is also a strong social responsibility argument for ensuring drivers understand the importance of best practice – according to Department of Transport figures 28,572 people were killed or seriously injured in 2008 on Britain’s roads.

Economic Savings

Rather than viewing it as a hindrance, effective risk management should be viewed in a positive light particularly as it can produce major cost savings for a firm.

Consider the fact that 65% of all company vehicles will be involved in a road incident within the next 12 months and that the average repair costs will be around £1,400 per claim (before adding on the down time and any uninsured losses).

Ensuring drivers are properly trained can make a real difference not only in a potential reduction in insurance premiums but in a whole host of other areas. For instance:

• Fuel consumption improvements of at least 7%
• Reductions of a least 5% in wear and tear on tyres, brakes, clutches, etc
• Improved vehicle value of at least 4% if a trained driver operates the car
• Minimised vehicle downtime

It is worth remembering that driver training can typically reduce fleet costs by up to 20% in the first year.

The Need to Act

In today’s marketplace, ‘brand value’ is a major competitive advantage so any unlawful actions by an employee driver, whether deliberate or accidental, can significantly damage a company’s reputation.

Risk management can prevent these worst case scenarios ever happening – the bottom line is you stay legal and you keep your costs down at the same time.

All information made available on this website is intended to be of general use only and is not made available for any specific purpose and does not constitute legal advice. The above information may not deal with every important issue or cover every aspect of the issues with which it deals. It is not intended to replace advice from professional risk managers and legal advisers. Please read our full legal disclaimer.

Related Links

Corporate Manslaughter (pdf 936kb)