JLT Specialty: Product recall – protecting your brand and reputation
By Sally Swann, senior partner, head of Midlands risk practice, JLT Specialty
“IN today’s commercial environment a large and growing part of the potential damage encountered in a product recall situation revolves around the impact the recall can have on a company’s brand and the associated impact on future sales.
The majority of product recall insurance policies give policy holders access to a crisis management consultant, the value of which cannot be underestimated. Imagine for example the plight of a food manufacturer that has just discovered salmonella in one of its sauces.
• How is the source of the contamination identified?
• How is the production site sealed off to prevent the bacteria spreading?
• Was the contamination accidental or malicious?
• Who carries out tests to verify the discovery?
• Who manages communications with staff, customers, suppliers, media and other stakeholders?
• Who liaises with the Food Standards Agency and HSE?
These are just a few of the questions that must be answered quickly, effectively and accurately.
If this does not happen, companies risk losing control of the situation. It then becomes very difficult to manage the crisis, leading to negative publicity, which will have a direct impact on commercial relationships and future sales.
The role of a crisis management consultant is to manage the whole situation and help your business minimise the losses suffered. This is especially important today in the digital age of social media channels and 24 hour news feeds.
In any business there needs to be an understanding of how a crisis would play out. Crisis management consultants can provide onsite crisis scenario training so the business can rehearse how their crisis management team reacts and identify areas for improvement.
There are also other pre-loss services available to help, including a documentation review, crisis management training and mock audits.
Businesses can then see if they are compliant and up to date with latest industry guidelines and regulations.
For food and drink businesses in the UK, the challenge is to ensure their product recall plans are as robust and effective as the rest of the quality control standards they must adhere to.
The insurance market is increasingly focused on the liabilities created by adverse publicity. Various new policy wordings are now available so businesses can tailor their cover to suit their needs and requirements.
Expert advice from an insurance professional combined with carefully chosen insurance cover can protect your business against the loss of profits created by negative publicity following an incident such as product recall (remember the horsemeat scandal), supply chain fraud or even inappropriate actions by a celebrity endorser or a data breach that becomes public.
For more information or to discuss any aspect of product recall or managing a crisis please call me on 0121 633 3377.”
