Managing Rising Food Recall and Advisory Risks

May 2019 - Crystal Carpenter

Key Points

  • The financial implications of a food recall or advisory can be enormous. Reputational damage on top of other costs can be catastrophic for suppliers, especially small companies found to be at the source of a contamination.
  • The costs of a recall or advisory – and who bears the costs – can vary widely depending on: whether it is an advisory or a recall, specificity of the advisory, timing and duration, geographic distribution of the event and the company’s operations, company size, product diversification, level of consumer awareness, and contract and insurance specifics.
  • Unlike a recall, there is no insurance coverage currently available for an advisory. While policies are being developed to cover an advisory, the industry is skeptical of their true coverage and the potential costs.
  • To actively manage the growing and significant food safety risks, food suppliers must: develop risk mitigation plans and make them a priority, invest in risk mitigation efforts, know their risk exposure, and have a recall/advisory plan in advance.

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