ARM – 54 Risk Management Principles and Practices...

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Presented by:

Erike Young, MPPA, CSP, ARM

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Chapter 11

Fleet Risk

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• Every system has four common characteristics: – Components and Purpose

– An environment in which the system operations

– A life cycle

– Systems relationships

• System safety rests on the premises that a system will operate safely if its components enable it to fulfill its purpose within its environment without any system components failing throughout its life cycle.

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Fleets as Systems

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• Components and Purpose – the basic components of a fleet system include:

– Vehicle

– Vehicle maintenance

– Operators

– Cargoes

– Routes

– Vehicle schedules

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Fleets as Systems

• Components and Purpose – The essential purpose of any fleet system is to transport

cargo or people.

– Goals of an organization are likely to be best served by a

motor fleet whose operation has the following characteristics: • Reliable • Safe and well maintained • Efficient • Lawful • Environmentally Neutral

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Fleets as Systems

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• Environment – system environments include physical legal, economic, and competitive aspects

– Physical Environment – highways, weather conditions,

routes, tangible objects and forces the vehicle encounters

– Legal Environment – laws, both written and statutes enforced by police officials and courts.

– Economic Environment – fleet safety is support by adequate

budget during good times and conversely suffers when bad times cause budget constraints.

– Competitive Environment – When org operates in normal

competitive environment, fleet safety is more likely to receive the emphasis and the financial and managerial support it deserves. When competition becomes very intense, however, fleet safety efforts and expenditures can be lowered in shortsighted efforts to save money today. Such measures eventually jeopardize the long term safety of vehicle operators and their cargoes.

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Fleets as Systems

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Fleets as Systems Life Cycle

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• System and Relationships – most systems tend to be “Nested” within other systems so that

smaller systems are components of large systems and large systems consist of smaller sub-systems.

• “Nesting” has two implications for loss control and fleet

safety mgt:

– When a smaller systems fails, it becomes more likely that each of the larger systems of which the smaller systems is a part also fail.

– The failure of a larger systems degrades the environment in which its subsystems operate, increasing the strain on those subsystems and making their failures more likely.

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Fleets as a System

Vehicle Selection – vehicles selected with safety in mind are suitable for the tasks they have been chosen to perform, have a good safety record, are easy to maintain, and are reasonably uniform with the fleet. This means the greater the probability the driver can operate any of the vehicles with equal safety, knowledge, and confidence.

Safety Equipment – solid body construction, high maneuverability, and exterior color that is easily visible in low lighting conditions. Safety equipment is effective only if the operator of each vehicle inspects the safety items regularly to make sure it is working properly.

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Risk Control of Fleet Systems

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Federal Motor Carrier Safety Regulations (FMCSR)

• FMCSR is part of the legal environment that a fleet operates and recognizes its role in ensuring fleet safety

• Application to Fleet Operations – rules apply to the following operations – Vehicles with gross vehicle weight rating (GVWR) of 26,001

or more pounds – GVWR of 26,001 or more pounds, including any towed

vehicle with GVWR exceeding 10,000 lbs – Transport 16 or more people, including the driver (15

passenger van) – Transport hazardous materials as identified by the

Hazardous Materials Transportation Act and subject to Hazardous Materials Regulations (any size vehicle)

– Exemptions: Taxis, school buses, and van pools


• Significant Rules – Driver Qualification

– Drug testing for Employees who Perform “Safety Sensitive” Functions

– Hours of Service Rules

– Accident Reporting Rules

– Record Keeping Rules

– Electronic Device Usage Rules

– Compliance, Safety, and Accountability (CSA) Program

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• Driver Qualifications

– Must have a commercial driver’s license (CDL)

– Establish penalties and disqualification terms for commercial operators convicted of certain criminal offenses and serious traffic violations

• DUI blood alcohol level is lower for CDL

– DMV Employer Pull Notice Program mandatory enrollment

• Must provide employer notice of motor vehicle violations upon hire and annually thereafter


• Drug Testing – FMCSR requires compliance with Department of Transportation

requirements on drug and alcohol testing for drivers who are required to hold CDL

– No driving within four hours of drinking alcohol – Cannot refuse to submit to alcohol test, or use within 8 hours after an

accident or before post-accident testing – Testing can be performed for the following reasons:

• Pre-employment • Random • Reasonable suspicion/reasonable cause • Post-accident • Return-to-duty • Follow-up

– Positive test is anything above BAC of 0.02 or higher and must be removed from safety sensitive duties for at least 24 hours

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• Hours of Service Rules


• Accident Reporting Rules

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• Record Keeping Rules

– DOT required records supporting financial and operational data

• Driver logs, testing data, etc..

• Electronic Device Usage Rules

– Devices include cell phone, pager, computer or other device to input, write, send, receive, or read text


• Compliance, Safety and Accountability (CSA) Program

– Uses Safety Measurement System (SMS) technology to track and update safety performance

– Score is developed based on unsafe driving, hours of service, driver fitness, substance abuse impairments, accident frequency and severity

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Controlling Losses Associated with Motor Vehicle Safety Systems

• Main components of Safety System

– Vehicles

– Vehicle Maintenance

– Drivers

– Cargos

– Routes

– Vehicle schedules


• Vehicles

– Fleet safety is influenced by selection of task-appropriate vehicles, establishment of safe operating practices, and vehicle maintenance and replacement

• Although not a vehicles operation, Southwest is an example of a “system” that considers these elements – Only one type of aircraft makes training more standard and

maintenance easier

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• Vehicle Selection – Goal is to choose vehicles that can safely and

efficiently transport the anticipated cargoes and passengers

– Factors include • cargo size and type

• characteristics of cargo (load shifts, flammable, etc.)

• Number of passengers

• Geographic area operating (highway, mountains, etc…)

• Safety considerations

• Maintenance


• Vehicles

– Safety Equipment

• Most vehicles have standard safety equipment

• Specialized vehicles may require additional safety equipment

– Air brakes, audible back up signals, rock guards

– Vehicle Replacement

• Replacement schedule should be developed with funding mechanism based on miles or years of service

• Provides an opportunity to reconsider fleet needs that may have changed over time or to meet regulatory requirements

– School bus replacement due to Air Board Requirements

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• Vehicle Maintenance – Affects fleets losses two way:

• Proper maintenance tends to improve safety records and reduce losses.

• Maintenance can be a hazardous operation and must itself be performed safely.

– Preventive maintenance

• maintenance must be done on scheduled basis even though no mechanical problems are apparent and is a key to safe, reliable performance of any vehicle.

• keeps accident from happening and enables vehicles to complete trips on time without breaking down, provided that every vehicle in the fleet has time to reach and stay at a proper maintenance facility at least as often as good maintenance requires.


• Vehicle Maintenance – Performing maintenance safely

• without precautions, mishaps during maintenance can cause serious injury and major damage to the mechanic, vehicle, the equipment or the facility. Most fleet maintenance accidents arise from: – Vehicles shifting or falling off jacks

– Burns from hot vehicle parts and engine

– Tires exploding

– Struck by air-powered tools

– Flammable solvents

– Struck by high pressure water or steam

– Fires and explosions from fuel

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• Drivers

– Driver Selection

– Driver Training

– Driver Supervision

– Driver Licensing

– Driver Dismissal


• Driver Selection

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• Driver Training – may involve classroom training, behind the wheel teaching, or

independent study in various ways such as textbooks, films or interactive computer programs.

– All vehicle operators should be trained in the following areas: • Traffic laws • Safety features • Cargo hazards and characteristics • Defensive driving • First aid procedures • Safety inspections • Post accident procedures • Techniques for assessing fatigue and ability to perform safely

– Training may be basic, refresher, remedial, or specialized.

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• Driver Supervision – purpose is to motivate drivers to act in the best interests of the

organization by operating their vehicles safely and cost effectively.

– Supervisors must focus on reinforcing safe, efficient operator behavior and on discouraging or disciplining unsafe, ineffective behavior.

– Where lack of supervision is a fact, some organizations compensate with procedural or physical controls such as written logs and dispatchers watch and listen for incidents, accidents, or complaints from public that point to particular weaknesses in the operations or drivers conduct.


• Driver Licensing

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• Driver Dismissal


• Cargoes

– Suitability to Vehicle

– Proper Loading

– Suitability to Routes

– Safeguards Against Inherent Vice

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• Suitability to Vehicle – cargo is suitable to a vehicle only if the vehicle possesses no

unreasonable hazard to the cargo and the cargo poses no unreasonable hazards to the vehicle

– Some cargo required specialized vehicles for safe transport

• Proper Loading – the potential to overload or not properly secure cargo can lead to

serious losses both of product and damage to vehicle

• Suitability to Routes – certain routes can unduly threaten specific cargoes when those routes

create dangerous environments and visa versa with cargo threatening a particular route with heavy population

• Safeguards Against Inherent Vice – Inherent vice is a condition that can cause property to deteriorate or

destroy itself. Some cargoes tend to destroy themselves if not kept in a controlled environment, which must always be functioning and properly maintained.


• Routes

– Suitably safe, cost effective, reliable routes are those that present no unacceptable hazards to vehicles, drivers, and cargoes

– Reasonable in distance

• Distance is a very important factor. The less distance a vehicle, its cargo and operator, have to travel on the road, the less likely they will incur a loss.

– offer some flexibility of alternatives if the main route is blocked or closed

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• Vehicle Schedules – A sound safety oriented schedule provides enough time for

vehicle operators to complete their trips on schedule without rushing and without becoming involved in scheduling conflicts.

– Sufficient time schedules also give operators flexibility to deal with unforeseen events.

– Incentive programs should also include incentives for safety-related conduct; otherwise, such programs tend to jeopardize safety because operators may be tempted to speed, drive too many hours, skip scheduled maintenance or safety checks, or take less desirable routes to save time.

– Reasonable scheduling allows some flexibility for unforeseen difficulties and avoid scheduling conflicts

Technological Advances in Motor Vehicle Fleet Safety

• Technological Advances – Onboard computers can capture information about

risky driving behavior, and allow a risk manager to evaluate operator performance before an accident

– The following other fleet safety technologies exist: • Stability control systems • Rear mounted videos • Antilock braking systems • Onboard tire inflation system • Satellite communication and GPS systems. • Dash mounted video cameras (DriveCam or SmartDrive) • Lane departure warning systems • Forward collision warning systems

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• Technological Advances – onboard computers can capture information about risky driving behavior, and allow a risk manager to evaluate operator performance before an accident.

• The following other fleet safety technologies exist: – Stability control systems

– Rear mounted videos

– Antilock braking systems

– Onboard tire inflation system

– Satellite communication and GPS systems.

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Risk Control of Fleet Systems

ARM – 54 Risk Management Principles and Practices...

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