Within an organisation's enterprise risk management process, fleet risk management is now a major risk to be managed in a consistent and holistic manner.
Ideally fleet risk management should involve an enterprise-wide process for integrating the risk management of fleet and related risks at strategic, management and operational levels. One that covers risks across a full range of business, commercial, operational and support functions. It needs to identify and assess risks across the whole organisation and its supply chain, within strategic aspects, management support, vehicles, drivers, loads, sites, journey and delivery.
The use of fleet and related operations to satisfy supply chain needs has substantially increased over the last ten years. The procurement of goods from overseas has grown significantly, with increasing outsourcing to overseas production. Land based alternatives to road transport have almost disappeared, coastal sea transport has not stepped in to fill the gap, so road based transport methods have become the automatic choice. Additionally, the supply chains of many organisations require the use of fleet and related services to deliver ‘just-in-time’ fulfilment. The growth of the internet and general consumer spending has created a demand for ‘instant customer fulfilment’, both home based delivery and local retailer availability. As a consequence, traffic volumes have grown significantly and congestion is a top-ten concern and reality for many organisations. In turn this has raised concerns about environmental impacts and an increasing discussion about viable alternatives.
So, where does fleet risk management sit in this scenario and how can it contribute to valid solutions that maximise opportunities for an organisation, whilst minimising risks. Fleet risk management is often viewed as a pure operational level activity, while other organisational functions – production/operations, finance, commercial, procurement, human resources and quality are only considered in their departmental silos and not fully integrated with fleet activities. Rarely does fleet management receive a high level of management attention and very rarely is it considered as a strategically important corporate risk to be consistently managed as a key aspect of the business. Yet with the importance of fleet transport, ever increasing, this risk area is one that can not be ignored. Initiatives typically deal with driver recruitment and training, human resource issues, vehicle purchasing and allocation, fuel consumption, accident data and post accident management. Resulting control measures normally only relate to the core focus of the initiative.
Pressures are increasing to think of new ways to reduce and manage risks and exposures and maximise organisational benefits from improved risk management. Organisations are therefore looking for new ways to identify how they are creating risks across their total operations, whether directly or indirectly managed and how risk management can add new value to business success.
Enterprise risk management (ERM) enables an organisation to develop and implement a consistent approach to managing risks across its entire organisation. Corporate governance requires the 'enterprise' to identify its risks across its total operations and prepare a strategy to reduce the impact on the business and its stakeholders.