15/06/2014

A product recall can devastate a company’s reputation, brand name and profitability. No matter what its size or industry, a company can be left in ruins if it does not manage a product recall correctly.

Product liability risks are increasing because of the tendency to source components or other materials from parts of the world that may not have strong regulations which help reduce defects.

New product safety regulation increases your risk and potential liability. For example a manufacturer may not be entirely to blame for a defective component incorporated into its product that was sourced from another country, but it may be held responsible for a breach of safety.

Vital question that you need to consider:

• How many product recalls have you experienced in the last ten years?
• What was the cause: product contamination, a manufacturing fault or something else?
• What process or mechanism do you have in place for identifying a reportable issue?
• Are all your potential risks covered by your insurance programme including major losses?
• What type of manufacturing processes and controls are in place in your manufacturing facilities or those of your suppliers?
• Are you aware of legislative changes in all the markets in which you operate or distribute your products?