The coronavirus pandemic has forced companies to ramp up risk management, but there are still too many that are not sufficiently focused on the practice.According to Oliver Naidoo, managing director at JC Auditors, the negative impact of this is evident on the country’s roads every day.“In the logistics environment, things move quickly in a constantly changing environment, driven by client demand,” he explains. “The operations department is under constant pressure to ensure the wheels are turning to get the product delivered on time – understandably so. In this hurly-burly environment, risk management often takes a back seat, resulting in unacceptably high incident and accident rates. Ask any insurer about their loss ratios in the transport sector. Risks are inherent in every industry and risk management is important because it allows a business to implement processes or systems to mitigate operational risks.”According to Naidoo, the biggest challenge in the logistics sector is the potential disruption of the supply chain due to various factors. “The primary goal of risk management is to implement systems and processes to prevent or minimise the likelihood of such disruptions. Road safety risks remain the biggest challenge for risk managers in the transport sector. The key road safety risks include risks related to loading, vehicle safety, journey management, driving behaviour and driver wellness.”Naidoo said based on 5 000 audits on transport companies over the past 15 years, they have found that often companies do not have adequate processes to manage these risks. “Sometimes, the process may exist, but inadequate implementation results in high-risk behaviour going unchecked. A typical example is the management of driving speed. A transport operator may have a speed policy, but unless there is monitoring and consequence management for all speed violations, the policy is of no ef fect.”He said Covid-19 had highlighted the importance of a solid risk management approach.“Companies with existing good risk management systems were able to incorporate and manage Cov id-19 r isk s more quickly and effectively than those that did not have robust risk management systems in place.”According to Naidoo, many companies consider risk management a grudge purchase. “Of course, there are some exceptional companies with world-class risk management systems, so this generalisation is somewhat unfair on them. It is not uncommon, however, to find that risk management initiatives are marginalised when there are competing priorities or when businesses face tough times.”He said it was well known that the effect of Covid-19 had had a devastating impact on the transport sector. Covid-related job cuts inevitably meant that a reduced work force still needed to keep the wheels rolling, admittedly fewer wheels. “But a risk is a risk, so whether it is four wheels or 400 wheels, the key aspects and overheads of risk management are still fundamental aspects of a business.”In this new environment, safety or risk managers who would traditionally have been focused on road safety, health and safety, and environmental management have been compelled to shift focus to Covid-related protocols such as screening, Covid case management, Covid awareness training and the like. “As we see businesses return to scale, it is crucial that the fundamental risk management protocols are given the attention due,” said Naidoo. “Risk management is a key pillar for any company that wishes to be sustainable. It involves mitigation of both exceptional and ever yday r isks.”
