The Real Impacts of Product Recall Hort Connections 17 May 2015

Transcription

1 The Real Impacts of Product Recall Hort Connections 17 May 2015 Victual Pty Ltd is a Corporate Authorised Representative (No ) of Insurance Advisernet Australia Pty Ltd, AFSL

2 Agenda Product Recall does it keep you awake at night? Direct and Indirect Costs of a Recall AFGC survey on recall preparedness Holistic approach to recall planning

3 Recall Trends Recalls are trending upward Source: FSANZ,

4 Recall Trends It s a real issue in Fresh Produce Source: FSANZ,

5 Real Cost of Recall Type of cost Recall costs are escalating Costs are Direct or Indirect Global Average Recall Cost $USD10M Estimated Cost of Recall Source: GMA & EY, 2011, Capturing Recall Costs, USA Value of recalled products Retailer administration charges Public Relations Advice Legal Advice Value of unaffected products that are returned or implicated Point of sale notices Consumer care line and monitoring of social media sites Advertising recall notices Customer reimbursement i.e. vouchers, replacement product Product Disposal Shipping / additional logistics charges i.e warehousing Specialist advice i.e. consultants, laboratories Relabelling, packaging changes Value of loss of contract to supply Fines and penalties Post recall advertising - brand recovery Placement Product Costs Cost of Production Stoppage / Shutdown Additional labour costs for reworking Your Loss of Profits Customers Loss of Profits

6 Real Cost of Recall Indirect Costs: Brand and reputation Market Share Share Price Market Impact Largest concern regarding recall impact Source: GMA & EY, 2011, Capturing Recall Costs, USA The estimated cost to one company was $78 million. The estimated cost to American peanut-containing product producers was $1 billion Source: GMA & EY, 2011, Capturing Recall Costs, USA

7 Victual and the AFGC collaborated to complete an industry survey into the preparedness of the food and beverage industry for product recall. Recall Survey

8 Survey Findings Recall Plans 100% had a documented Recall Plan 89% had reviewed their plan in the past 12 months 87% had conducted a mock recall in past 12 months

9 High level of confidence in ability to trace products through supply chain Survey Findings

10 Survey Findings Crisis Management Not as well prepared Spokesperson ready? Social Media Threat Definitions: Recall: A recall is an action taken to remove from distribution, sale and consumption, food which may pose a health and safety risk to consumers. (reference is FSANZ, Food Industry Recall Protocol) Crisis: Crisis is an abnormal and unstable situation that threatens the organisation s strategic objectives, reputation or viability. (reference is from BS 11200, Crisis Management Guidance and good practice)

11 Survey Findings Response: Recognise the need for expertise to adequately respond

12 Survey Findings Risk Transfer: 19% have no insurance for recall Lack of understanding of insurance cover Cover likely inadequate for exposure

13 Insurance unlikely to respond sufficiently to cover all losses Survey Findings

14 Survey Findings Limits Purchased Global Average Recall Cost $USD10M Limits purchased likely inadequate

15 Recall Management Prepare Prevention Response Plans Educate Maintain Test plans Review plans Educate Respond Quick decisions Access to expertise Focus on customer Insurance Catastrophe protection Appropriate limit To cover all costs

16 Summary Survey Summary: Generally well prepared for a recall Not as well prepared for a crisis Direct and Indirect Costs of Recall are rising Access to expertise and quick response crucial to limiting impact Inadequate levels of insurance Effective recall management requires: Quick response Access to expertise Effective stakeholder communications Plans trained and tested Insurance gives comfort that business is protected Coming Soon. Victual Recall Register your interest here:

17 About Victual Victual Purpose Creating value by rethinking and better managing risk Access full version of survey here: Or contact us at Victual Peter McGee