|
A product recall can cause devastating damage to a company's brand name and profitability. No matter what its size, industry, location or reputation, a company can be left in ruins if it does not manage a product recall well.
Current legislation and manufacturing trends necessitate this more than ever. Efforts to reduce costs have led to overseas outsourcing, which places product quality and safety outside the full control of a corporation. Often it leads to questions about employment practices abroad, which can give rise to public demands for a product recall. Without a formal process in place, this or any other type of product recall can quickly turn into a crisis.
To minimize the costs and mitigate the associated risks of such an incident, companies must proactively assess and manage their product recall risks.
What Will You Say When They Ask What Happened?
If you are concerned about the impact a product recall can have on your company, you should be asking yourself the following questions:
- How can I protect my brand from a product recall?
- Does my company understand federal, state and international regulations regarding product recalls?
- Do I have a protocol in place for managing a product recall?
- Has my company assessed potential vulnerabilities in manufacturing processes or the supply/distribution chain? How much of my manufacturing should be done domestically versus internationally? Should I be using foreign trade zones or custom bonded warehouses?
- Do I know how past incidents have been addressed and do additional actions need to be taken?
- Does my company have a trained product recall team? Is the team adequately qualified to assess all aspects of a recall situation?
- Do my employees know what to do in the event of a recall?
- Does my company know how to manage recall-related communications?
- Does my company have regulatory compliance and public relations experts in place to deal with such an incident?
- Is my company prepared to manage recall-related litigation?
- Do I know what is covered by my insurance policies? Do I know the level of proof needed for recovery from my insurance company?
- Do I know which external authorities might need to be notified and involved?
- How can I best determine how much a recall will cost?
- How can my company determine when a recall effort is complete?
- How can I ensure business accountability in terms of any product recall exposures when acquiring another company?
Who's Looking Out for You?
Product recalls present a complex array of questions, ranging from accurately determining the scope, nature, and extent of the loss, to the applicability of insurance policies, to managing regulators and the consuming public. Marsh's global Product Risk practice works with clients to quantify potential exposures, analyze resources available to respond to such risks, and ensure that the proper solutions are in place to optimize insurance recoveries and limit the financial and reputational impact of a product recall. Our consultants also assist clients with developing methodologies to help them avoid product recalls in the first place.
Assessment
Our consultants assist clients with analyzing their preparedness for a product recall situation, as well as the vulnerabilities, including bio-terror and container security, that could lead to a product recall. They help clients to evaluate their insurance and risk management, quality assurance, product loss accounting procedures, regulatory compliance, supply/distribution chain, and the legal and public relations resources available. Following such an assessment, the team recommends measures for improving a company's readiness for a product recall.
Implementation
Whether as a follow-up to the preparatory assessment stage, or in the midst of a product recall, our consultants provide a wide range of services to help companies overcome the challenges they face and move ahead with their regular course of business. During the recall phase this can include:
- Assessing the scope of the recall
- Identifying affected product
- Investigating the cause of the problem
- Reviewing relevant insurance policies
- Assessing compliance with government regulations — for the company and its suppliers
- Timely management of recall and replacement efforts
- Accounting for lost sales and the total cost of the recall
- Establishing a claims processing mechanism
- Providing dispute analysis and litigation support services, such as expert testimony, in product liability cases
- Developing tailored information management systems
Recovery
Recovery from a product recall entails not just the immediate action of removing product from the market, but ensuring that its reintroduction meets with the expectations of regulators, shareholders, the media and the consuming public. Our consultants can assist clients with:
- Completing all reports required by regulatory authorities
- Monitoring and assessing the product's reintroduction, making strategy adjustments as needed
- Notifying all concerned parties when the recall has been completed
- Supporting corporate counsel with any claims against the company
- Advising on how to apply the lessons learned from the recall in the future
If you have any questions or would like additional information, please contact us.
If you are seeking information about insurance and related services, please visit marsh.com.
|
