17 Dec Minimising risk in freight and transport industries

Is your business risky? Are you doing enough to be safe?

Many transport businesses struggle with the Chain of Responsibility and its latest changes. Some see them as unnecessary safety regulations which just add costs and red tape.

Today, we’d like to offer an opposing view by demonstrating why choosing an innovative approach to reducing risk and making your business safer leads to a more productive and profitable outcome.

Forces of Change

The Chain of Responsibility (CoR) regulations continue to evolve for the transport industry. These legislative updates create economic forces of change for your business.

Unlike random external events, you know exactly when these changes will take place. Successful businesses find ways to address these changes in a positive manner for their safety, efficiency and profitability.

The goal of Chain of Responsibility is to improve safety for all participants in the supply chain (National Heavy Vehicle Regulator [NHVR] 2018).

The National Heavy Vehicle Regulator focuses on the positive side of changes such as reducing red tape. However, for those who choose not to comply, there are economic and legal penalties. The latest changes have increased the penalties substantially as shown below:

Most incidents are a result of multiple breaches which magnifies the economic downside. Category 1 breaches can even lead to jail time for both individuals and executive management. Your business needs to address the regulations and changes. The question is, how?

Responding to Change

The most recent change revolves around the concept of Primary Duty which is “an obligation to eliminate or minimise potential harm or loss (risk) by doing all that is reasonably practicable to ensure safety.” (NHVR 2018).

To address this in your business, you could apply one of the three strategic approaches discussed below.

Limpet Strategy

If you adopt the Limpet Strategy, you are going to do as little as possible as you believe your safety doesn’t need improving.

You don’t want to invest as you only see costs and think doing nothing saves money.

Poor safety eventually leads to incidents, resulting in downtime, damage and people getting hurt. The money you saved will be dwarfed by the fines listed above.

Cautious Strategy

Choosing the Cautious Strategy is a defensive approach. You know a Safety Management System (SMS) is an effective tool for reducing risk and harm (NHVR 2018), so you choose to implement a basic SMS.

This minimises costs and limits the impact on your operations. You are protected from the economic downside and your people are safe, but you will continue to see safety as pure cost.

Innovative Strategy

Selecting the Innovative Strategy is where the opportunity lies for your business.

By innovatively implementing your SMS, you can meet your safety obligations and improve your business at the same time.

An SMS starts with Risk Management – an intense evaluation of the business focusing on hazards, near misses and incidents. Doing this honest appraisal builds a safety culture and makes people think about the business in new ways (Perryman 2018).

By critically evaluating your business, it provides opportunities to improve safety, operations and profit. Safety is everyone’s responsibility and now everyone is improving the business.

You are going to identify a lot of risks – and this a good thing. Each of these is an opportunity to create an innovative improvement. As you progress through the risk management steps, you gain a deeper understanding of the people, processes and equipment in your business.

Assessing each piece, in turn, gives you a chance to re-evaluate “who, how, what, when and where” to be safer and more efficient across the entire business. Your new SMS, will change business processes to align safety and operations for improved productivity. By the end, your business will be transformed. Using an innovative approach, there is a much larger business upside and the costs are equivalent to the Cautious strategy.

Embracing Change

The changes in Chain of Responsibility drive safety in the transport sector and all participants need to deal with it or face harsh penalties and possible jail time.

Responding with an innovative approach to Risk Management and an SMS, you address safety, meet the legislative requirements and take the opportunity to substantially improve your business. Embrace the change and you will be safe, more productive and profitable.

Need help in getting started in your Risk Management journey towards an innovative strategy? Give us a call and one of our Risk Consultants can help put your business on a path to safety and profit.