There are many costs involved when a product recall event is discovered. The total costs of withdrawing the product from consumers, identifying the issue, remediating it, and keeping the business afloat all present a business crisis for manufacturers and distributors.
These product recall events don’t always occur from within a business, and it is important to consider the impact a third-party driven recall event could have on your business.
- Government action and regulatory intervention can occur at any time and their involvement is unavoidable. An official authority orders a product recall event as it believes that a product could cause bodily injury or property damage. This can mean a business is forced to withdraw their product even where there is nothing wrong with it.
- Recall events can gain negative attention in the press or on social media. Negative publicity surrounding a product recall can cause significant reputational damage and a long-lasting impact on consumer trust. If allegations are made by a third party that a product could cause bodily injury or property damage, a product recall event could occur as a result.
Government actions: Why is it important?
Official authorities, including the FSA, FDA & CFIA, are increasingly involved in product recall events, and will act as early as it can in order to facilitate a product withdrawal. One misconception is that these entities are mainly focused on allergens, but as the FSA data from 2020 shows, the recall alerts have a variety of causes:
Included in CFC’s product recall policy
Both of these covers are intended to respond to product recall events that occur where bodily injury or property damage is alleged, but hasn’t necessarily occurred, and provides a manufacturer or distributor with peace of mind that they can respond as needed and be protected by their product recall policy.
At CFC, both negative publicity and government actions are available as standard on our wording, just ask your underwriter or email productrecall@cfc.com
