Soaring product liability awards have created a lack of capacity within the insurance market. The result has been very high insurance costs and stringent underwriting criteria. Senior managers who take an active role in implementing their organization’s product liability program have come to realize that these same controls can make their operations more productive, efficient and competitive.

Whether you manufacture a food product, prescription drug, or an automobile, you are legally responsible for that product which means that you must have a product liability program that is fully embraced throughout the organization. Developing proactive measures to reduce, eliminate, or shift your product’s risk may help you limit your product liability exposure in advance.

What Will You Say When They Ask What Happened?
To better manage the risks around product liability, senior managers should be asking themselves the following questions:

• Do we have a product liability plan that is routinely reviewed and updated as necessary?
• Have we integrated our product liability plan into our corporate strategy?
• Is our product liability program supported fully by our senior management team?
• Do we have the policies, procedures, and tools in place to maintain proper documentation throughout the life of the product?
• Have our business units been tagged with the responsibility to reduce overall product liability costs?
• Is our product liability plan based on best practices?
• Is planning for product liability issues part of our product design team and/or product development team?
• Are we factoring in the potential product liability risk when pricing our products?
• Have we integrated our product liability plan with our business continuity plan and/or our emergency response plan?
• Have we incorporated external and internal communication activities within our product liability plan?
• Do our product liability plans ensure compliance with all applicable regulatory requirements?
• Do we have the necessary resources to deal with a product liability event?
• Do we have the applicable tools in place to aid in mitigating any financial impact due to product liability?
• Do we understand how our vendors/suppliers deal with product liability on those items they provide to our manufacturing facility?