Product Recall: Mitigating the Risks and Exposures
The federal government mandates more than 1,000 product recalls each year, that’s an average of almost four recalls each day.
From vehicles to food products, manufacturers of all types are susceptible to government mandated or voluntary product recalls. Despite the frequency of recalls, companies tend to overlook the exposures the manufacturing industry constantly endures. The costs of a product recall can range from bodily injury and lawsuits, to loss of inventory, replacing a product, long-term decreased sales, or even loss of employee productivity. Your company is responsible for these costs and could potentially leave millions of dollars at risk if not handled properly. How would your operations be affected if your expenses increase by millions of dollars as a result of a single product recall? Many companies would have trouble keeping their doors open.
Companies that analyze their exposures and implement processes to help mitigate the costs and effects of a product recall significantly reduce their risk and can return their company back to profitability with minimal impact on the balance sheet. The process to develop this type of risk management plan has five main points.