by Jim Park
There are only two ways to deal with risk: you either manage it, or you finance it. You can decline to accept risk altogether, of course, which is clearly the best strategy, but once you've assumed it, those two options are what you've got. All too often, though, there's some wild card out there you can't manage.
You're running a little heavy, but what's an extra thousand pounds, really? You've been in the saddle a while longer than normal today. But you're feeling good, the sun's at your back, low in the sky, and the truck just feels right. So what's an extra hour or two? And what about that minor air leak? You can only hear it when you step on the brake pedal. Keeping that in mind, you work a bit harder than usual to keep your distance - just in case - until you can stop to have the hose fixed.
You're aware of the problems, you're mentally compensating for the difference, and besides, it's only small stuff anyway. You're managing the risk.
Then the car sitting at that intersection ahead jumps out in front of you. But something goes wrong; the car's engine stalls and it rolls to a stop 25 meters in front of you. At that distance, you've less than a second to react. You reef on the wheel, catch the rear fender of the car and spin it around a couple of times as you stand the truck on its nose out in a cornfield. Close call, but no one was seriously hurt, and after the cops do their thing everyone eventually heads away from the scene. It wasn't your fault anyway.
Then the letter comes in from a lawyer a couple of weeks later. Your management strategy has apparently failed. Now you're financing the 'minor' risks you took.
It seems that after the accident, the car driver approached a lawyer, who requested the accident report from the police, which stated that they found the air leak in the brake chamber and also the bills of lading suggesting the gross weight was in excess of the maximum permitted by law. Now, they're holding you partly responsible for the car driver's injuries, implying that because of the defect and the overweight condition, you were unable to control the vehicle in a manner that might have prevented the incident.
By the time they're finished matching your fuel receipts with your logs, that extra hour's driving time on that fine summer evening will cost your insurance company at least a million dollars. Had the car driver been killed instead of slightly injured, you might be looking at a jail term.
Of course it's completely outrageous, but some failed risk-management scenario just like this one happens somewhere in North America every day. Here are a few real-life accounts:
- a truck driver blamed for causing a fiery chain-reaction accident that killed four people and injured five others on I-75 was sentenced to two months in jail. There was evidence that fatigue played a role in the crash, though he was legal at the time of the crash. There was no wrongdoing other than an established pattern of hours-of-service violations.
- the State of Pennsylvania sued the estate of a truck driver and his employer following an accident that caused $2.7 million in damage to Interstate 95. The driver was five hours over 70 in the previous eight days, and had just begun his shift when the accident occurred.
- a trucker who may have nodded off at the wheel was charged with aggravated vehicular homicide after a fatal crash in Ohio. He had only possessed a commercial driver's licence for nine months, his log was behind, and he had several traffic citations on his record.
You can blame the lawyers if you want, but they're only capitalizing on poor risk-management strategies employed by these unfortunate drivers. The drivers played the odds, and the house won. Their number was up. Use any analogy you want, but in each of the above actual events, and in our illustration, the drivers decided to accept a degree of risk rather than decline it, and then wound up financing it because they were unable to manage it.
And that's precisely the point of this story. We can't make the lawyers disappear, but we can learn to minimize risk by giving the lawyers less to grab on to when they start looking around. The process is called 'due diligence'.
It's really all about doing things right - and then being able to show it. Due diligence, as practised by the Arthur Anderson accounting firm in the on-going and much publicized Enron scandal south of the border, is clearly not about shredding or destroying evidence after the fact.
At the risk of oversimplifying things, it's darned difficult to stay on the right side of the compliance ledger all the time. There are a million reasons why you might be overweight, or why your hours might be behind, or why you can't repair that minor air leak the minute you discover it. But at this point, in the view of John Oldfield, you're no longer just a truck driver, you're now a risk manager.
Holding the Bag
Oldfield, an insurance broker with Dalton, Timmis, Jennings, Inc. in Hamilton Ont., is a guy who spends more Saturday mornings than he wants to admit conducting safety meetings for the carriers he insures. He doesn't stand at the front of the room droning on about compliance issues any more. He shares his theory of risk management - accept or decline, then manage or finance - with his client's drivers.
"I tell them that they alone are in a position to decide on the level of risk they're prepared to accept, which translates roughly into deciding what threshold of compliance they intend to maintain," he says. "But it's not about compliance just for the sake of the exercise. Compliance is due diligence, and due diligence is a good risk-management strategy."
Oldfield likens the decision to accept risk to yanking the handle on a slot machine. In Vegas, he says, the odds are much better. "But the house has to win in the end; otherwise, there's no house."
So there but for the grace of God you go, merrily rolling along, managing your risk (the air leak and the extra 50 cases of oranges) when the house whips an ace off the top of the pile and creams you. How could you have planned for that car to stall precisely at that moment, in precisely that location?
Oldfield's slot machine analogy is ideal in this application. He says drivers get used to the risk.
"It's too easy to minimize the potential impact of a loss if you've had a good winning streak going," he says. "A gambler isn't any more likely to walk away from a hot slot machine than a driver would from a risky situation if the risk seems manageable, or if there's never been a reason to believe a loss is imminent."
Albert Labelle lost a lot one Saturday morning in August, 1998 while bobtailing along Edmonton's Whitemud Trail. It was reported that he'd returned home on Friday from his week's work, and was on his way to the yard the next morning when traffic ahead of him suddenly came to a halt. Unable to bring his truck to a stop in time, Labelle chose to swerve into the median rather than slam into the cluster of stopped cars. He struck and killed 39-year-old Perry Ruguilies, seriously injuring his three-year-old daughter, April.
Psychologically, he'll be paying for his error in judgment for the rest of his life. The court also saw fit to fine him $6000 for violating the hours-of-service regulations.
What hours of service had to do with the accident was never made clear. A source close to the investigation told highwaySTAR that police had wanted to charge Labelle with careless or dangerous driving, or something worse, but didn't think they could make the charge hold up in court. After investigating his records, police found that Labelle had a pattern of running longer hours than the law permitted and falsifying his logbooks. Prosecutors were unable to produce evidence that these falsifications applied to the day of the crash, but they laid the charge anyway. Labelle did plead guilty to several counts of not maintaining a proper log and falsifying his log.
The significance to this illustration is that where there's a guilty plea, there's an implication of responsibility.
In the example we cited above, where the State of Pennsylvania sued the estate of a truck driver, Keith Thomas, and his employer, the Samuel Coraluzzo Co., of Vineland, NJ, for $2.7 million, the state found grounds for the suit in the fact that Thomas had worked five hours over the limit of 70 hours in the past eight days.
The record shows that Thomas had just begun his shift when the crash occurred. An eyewitness even told police that a car had swerved in front of Thomas' truck. But following an investigation that likely included a close examination of toll records, delivery receipts and other time markers, state police concluded driver fatigue was the cause.
We'd say go figure. Pennsylvania said pay up.
So next time you're sitting in Texas with a heavy load of watermelons and someone's giving you a lecture about freshness, conduct a little exercise before you stick it into the wind. Ask yourself whether you can manage the risk, or afford to pay for it.