Product recalls are not the most common of claims but the financial impact can be severe. Regardless of how good a client’s procedures and testing may be, all it takes in many instances is for one employee to have a lapse in concentration and suddenly an incident has occurred. This one mistake can often lead to substantial loss.
Not all incidents are unintentional or accidental. Recalls can also occur because of malicious tampering. There are many high profile cases of products being tampered with on the shelves. However, of even more concern for companies should be “internal tamper” on the production line. These tampers do not always receive the same publicity but can have an extreme impact on a company. In most of these cases the procedures and controls a client has in place will have little or no impact on the likelihood of a tamper, because it is wilful action rather than accident which causes it.
Below are some actual examples of the potential financial impact of an incident:
Pre-prepared meals Client’s turnover $12m Size of product recall claim A$1.4m
Beverage Client’s turnover A$ 9m Size of product recall claim A$ 1m
Snack Food Client’s turnover A$ 6m Size of product recall claim A$ 250k
Dessert Client’s turnover A$ .5m Size of product recall claim A$ 100k