Seven Elements of Successful Risk Management

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Senior leadership has many responsibilities, and one is to make sure the company operates at a profit. Certain performance metrics contribute to profitability such as annual sales growth, return on investment, and profit margin. Profit margin, in particular, can directly correlate to the effectiveness of the organization’s risk management strategy. Senior leadership’s role in championing this strategy begins with identifying the motor carrier’s loss exposures and devising a plan to mitigate or avoid potential losses. What does this look like? Here are seven elements of a successful risk management program that senior leaders can adopt.

Engaged and Supportive Leadership

A motor carrier’s leadership team is responsible for defining the organization’s mission, vision, and values. In addition, establishing accountability and visibly supporting safety efforts are keys to building a culture focused on managing risk.

 

Risk Management Program Administration

A risk management program should be documented and maintained as operations change. It is never static. It can include foreseeable risks, estimated impact, a risk assessment matrix, and policies and procedures, such as the company’s process for managing claims.

 

Engineering Controls

Investing in equipment to help prevent losses can provide a favorable return on investment. For example, properly installing fender-mounted mirrors could cost less than $200 per tractor compared to a preventable lane change crash that could result in a claim costing thousands of dollars.

 

Workforce Selection & Retention

Hiring the right people requires due diligence. In the case of drivers, a risk management strategy can include developing hiring standards, road testing applicants, and thoroughly investigating an applicant’s background before making an offer of employment. Also, include a comprehensive onboarding program and driver retention strategy.

 

Training

Develop a new employee orientation program that reinforces the company’s dedication to preventing vehicle crashes and workplace injuries as well as regulatory compliance. Also, provide recurring safety training for all employees to keep loss prevention on their minds throughout the year.

 

Risk Control

Controlling the risks associated with trucking can include avoidance (best option), loss prevention, loss reduction, separation, duplication, and diversification. Leadership’s strategy will depend on their risk tolerance and the feasibility of implementing any of these controls.

 

Regulatory Compliance

Compliance violations can hurt the bottom line beyond any fines levied. A history of violations impacts the motor carrier’s reputation, which could lead to lost revenue and increased roadside inspections (i.e. business interruptions).

 

Call to Action

  • Develop a written risk management program
  • Communicate the company's commitment to preventing losses
  • Conduct mock DOT and OSHA audits
  • Develop written hiring and retention standards for drivers

 

The information in this article is provided as a courtesy of Great West Casualty Company and is part of the Value-Driven® Company program. Value-Driven Company was created to help educate and inform insureds so they can make better decisions, build a culture that values safety, and manage risk more effectively. To see what additional resources Great West Casualty Company can provide for its insureds, please contact your Safety Representative, or click below to find an agent.

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© Copyright Great West Casualty Company 2017. The material in this publication is the property of Great West Casualty Company unless otherwise noted and may not be reproduced without its written consent by any person other than a current insured of Great West Casualty Company for business purposes. Insured should attribute use as follows: “Used with permission by Great West Casualty Company.”

This material is intended to be a broad overview of the subject matter and is provided for informational purposes only. Great West Casualty Company does not provide legal advice to its insureds, nor does it advise insureds on employment-related issues. Therefore, the subject matter is not intended to serve as legal or employment advice for any issue(s) that may arise in the operations of its insureds. Legal advice should always be sought from the insured’s legal counsel. Great West Casualty Company shall have neither liability nor responsibility to any person or entity with respect to any loss, action, or inaction alleged to be caused directly or indirectly as a result of the information contained herein.

Filed Under:

Risk Management, Leaders

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