There cannot be a company in the country over the past six months that has not felt the sear of the accountant’s red pen slashing its way through the budget.

But, in the case of fleets, could cost cutting prove a false economy, especially when applied to risk management and health and safety?

A robust risk management policy can actually save a company money.

Fleet Audits director Stewart Whyte feels there has been a reduction in spend in managing occupational road risk in the last year but believes that the recession is not the only factor.

He points to a tail off in interest due to a lack of cases following the introduction of the Corporate Manslaughter Act last year.

Fleets were initially fearful that they would be held responsible if drivers had an accident while using a hand-held mobile phone use.

Roddy Graham, commercial director at Leasedrive Velo, claims they have nothing to fear.

“Most of the talk about mobile phones has been scaremongering,” he says.

“If the driver had a few pints at lunch and then had an accident, no-one would be suggesting that the employer is at fault.

"The driver knows he’s broken the law. It’s the same for mobile phones.”

Graham adds: “Fleets should have a policy in place that reflects the law.”

Mark Edwards, technical and product director for risk management firm Automotional, says organisations who already have well-managed risk programmes are aware of the savings they can achieve, but adds: “It is probably true that employers who are unfamiliar with the potential savings achievable are less likely to launch into a risk management programme.”

 

Geoffrey Bray, chairman of Fleet Support Group, says a lack of interest from management is still the number one reason for not taking up programmes.

He said: “We frequently hear of fleet managers who have recommended the implementation of safe at-work driving initiatives only to be over-ruled by their bosses.”

The view on risk management’s place in the corporate hierarchy of spending priorities depends on who you talk to, which proves one thing: not everybody is sold on its merits.

And the main reason for this is that it can sometimes be hard to quantify its benefit before implementing a scheme.

However, there are savings to be made, but they must cost effective, or else the accountant’s red pen will be out again.

Top tips

  • Try to ascertain the full cost of an accident, not just direct costs. Total costs are, on average, four times that of direct costs once lost orders and output, salaries, administration costs, legal fees and business interruption are factored in.
  • Exception reporting and dealing with those is a more efficient risk management approach.
  • Only manage what you can measure.
  • Better driver awareness can greatly improve fuel consumption.
  • Telematics can offer quantitative evidence of driver behaviour.

 

 

Risk savings

  • IAM Fleet claims that the average direct cost of a road crash is £700 per vehicle. With an average pre-training accident rate of 65% per fleet, the average cost per vehicle is £455. Post-training, the average direct crash cost is £595 per vehicle – a 15% reduction; the accident rate drops to 48%; the average cost per vehicle is £285. As a result, the savings per vehicle total £170.
  • Reducing the amount of fuel used could pay for risk management. ARM saved a 340-strong fleet £100,000 a year after drivers undertook an awareness training course. Before training, drivers achieved an average 45.7mpg over a test route. After the training, this improved to 54.3mpg.
  • Ian Walmsley, chief executive at Eagle-i Telematics, says companies can deploy telematics to cut costs by using technology to provide measures of driver performance. He says clients have seen improved fuel consumption of up to 12%, 10% lower servicing costs and reduced insurance risk profiles leading to reductions in premiums of up to 16%.