Canadian Underwriter
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Many retailers and manufacturers lacking recall strategy


December 11, 2008   by Canadian Underwriter


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Approximately two-thirds of manufacturers and retailers have no crisis or recall strategy in place, according to a survey conducted at a Marsh product risk seminar.
Most of the other one-third had not tested or reviewed their procedures in more than six months, the survey of manufacturers and retailers found.
More than half of the respondents had experienced potential quality and safety issues of products in the market, Marsh noted.
The number of survey respondents is not disclosed.
Many of these issues may have been caught earlier if appropriate testing methodology had been adopted, according to Marsh.
Companies involved in the production and sale of food should review their supply chains to identify the vulnerabilities to key suppliers, logistics partners and other constituents, allowing a company to realize the full extent and impact a single event can have on its business, Marsh recommends.
“While insurance products are available, they are not a panacea,” Hester Shaw, a consultant involved in Marsh’s product risk team, said in a release. “Contamination insurance can cover both the direct and indirect costs of a recall, but most policies only provide cover if someone becomes sick or there is damage to property within 120 days from the point of consumption. It also excludes contamination by a carcinogen, meaning that a recall similar to the Irish pork case would not be covered by insurance.”
The key to a successful recall is to have written and tested procedures that can be put into action swiftly during an incident, good traceability systems to identify all affected product and excellent internal and external communication plans to ensure speed and efficiency during a typically very fast-moving situation, Marsh says. “This is essential if companies wish to protect consumers, minimize their potential liability, reduce the financial damage and hopefully emerge from the other side with their reputations intact.”


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