In 2022, non-negotiable price increases, poor new car supply, and record high used car prices, have distracted businesses from the traditional areas of risk that were entrusted to the fleet department to manage. Meanwhile, emerging technologies, hybrid work arrangements and a focus on sustainability, have created new areas of organisational risk that need to be included in a fleet policy.
An effective fleet policy is about identifying, reducing and managing risk for an organisation so the owners and responsible officers (not just Directors anymore) can sleep at night.
A comprehensive fleet policy will cover four main risk areas (financial, reputational, human resources, legal) which have been explained in a new guide from Interleasing – Managing Fleet Risk – created to help Fleet Managers identify potential blind spots and take a holistic view at the risks inherent with owning or running vehicles for business purposes.
Anthony Perri, General Manager – Sales and Customer Relations at Interleasing, believes the pandemic and technology is changing the risk profile of fleet management which will require Fleet Managers to pivot towards non-traditional areas.
“There has always been the obvious risks in fleet management – residual values, maintenance expenses, accidents,” explains Perri. “However now, things are changing and emerging technologies are bringing new challenges to our industry which need to be considered.”
“Many organisations will be looking at sustainability and brand reputation so Fleet Managers can get involved and work with stakeholders across the business to make sure employee mobility is part of the discussion.”
Financial risk relates to the procurement of products and services, asset selection and business utilisation. This is the traditional focus of the fleet team and historically meant picking a vehicle manufacturer, a fit-for-purpose vehicle and making sure there were enough cars for the operational areas of the business.
Human resources risk relates to employee safety and accidents. A vehicle is a workplace so ensuring a car is safe and drivers are licenced to drive it are the basic requirements. Identifying potential risks also means understanding driver health, fatigue and journey planning. Reducing risks may involve telematics and a section in the Fleet Policy detailing the use of personal vehicles for work trips (grey fleet).
Telematics (or vehicle tracking) can help an organisation manage a number of different risk areas while also providing operational benefits. Many organisations are using telematics to improve driver behaviour and ensure the safety of workers in remote locations.
With the integration of multiple data sources, telematics is also being used to manage financial risk by identifying the fraudulent use of toll tags and fuel cars and reputational risk by improving customer communication with route planning for the delivery of services.
Social media has amplified the opportunity for reputational risk because customers and community stakeholders can mobilise quickly to target organisations not acting appropriately.
Traditionally, large organisations with vehicle signage have recognised the risks to their brand from poor driver behaviour.
“The impact of an adverse event on the driver, their family, and the community can damage the brand reputation of any business,” says Perri.
“Communities expect safe driving and are demanding more accountability from organisations. There is a focus on the environment and initiatives to reduce emissions so the type of vehicle is a statement to internal and external stakeholders.”
“This also extends to the condition of the vehicle which may be a growing issue as working from home policies and vehicle supply issues mean more employees are driving their personal vehicles for work trips.”
Ensuring compliance with laws and other government regulations is the main focus of managing legal risk in your fleet policy. By reviewing and implementing steps to reduce the first three risk areas (financial, human resources and reputational), many of the key steps for a good risk management framework will be in place.
A fleet policy that isn’t enforced will not reduce the risks for the organisation. Likewise, a policy that isn’t regularly reviewed won’t be relevant as mobility trends evolve and community expectations change.
Over the next decade Fleet Managers will need to take a more strategic approach to fleet policy development by engaging widely with various stakeholders and increasing their expertise in risk management so they can add value to the business.
To take a deep dive into all the considerations required to manage and reduce overall risk, as well as the day-to-day decisions and activities that need to be included in a fleet policy, download Interleasing’s Managing Fleet Risk guide.
