Developing an effective Crisis Management Solution is a critical strategy for product manufacturers and all businesses involved in the supply of consumer products.
That was the key message to insurance brokers who attended the product recall and crisis management workshop at the recent IBANZ 'Propet' Conference at Sky City.
Steve Hather, Managing Director of RQA Asia Pacific Pty Ltd (a specialist product recall and crisis management training and consulting company), presented a number of case studies on food, beverage and pharmaceutical companies, that had been ill prepared for a product contamination incident. Hather compared these case studies to companies that had effective product recall programmes and insurance protection in place.
"Every company supplying products will have an incident at some point. It's a case of when it will happen and how prepared the company is to handle the situation. There is no such thing as perfect processes, systems or suppliers in manufacturing," said Hather.
"Some incidents will lead to a product recall, but that doesn't mean it should escalate into a crisis that cost millions of dollars and threatens the brand, reputation and company's financial position. There are many instances of companies that have had to recall products and have not damaged their reputation, but enhanced it, because of the way they have handled the crisis," he said.
"The key to an effective recall programme is to think of it as a risk management programme and not just a recall plan. An effective programme must be carefully developed for the individual business and clearly understood by all parties involved.
"We see hundreds of product recall plans, but whether those plans provide useful guidance to companies to manage an incident also depends on whether their people understand the process and what their responsibilities are. It is critical that this is practiced."
Unfortunately for some business, the first time they find out that their plan is not useful is when they have their first recall. Mock recall simulations and training are highly recommended," says Hather. "This is a great way of testing the adequacy of company's risk management programmes."
There are important general management skills such as problem solving and decision making, facilitation and communication skills, that cannot be adequately documented in a product recall plan but are critical to successful management of an incident.
RQA is engaged by Chartis globally as an exclusive consultancy firm to provide support for their clients who have a Product Recall or Contaminated Product Insurance policy. Chartis clients receive RQA's consultancy services as part of their insurance coverage, making the development of an effective recall programme a key part of their overall risk management framework.
This service is aimed to help businesses complete their overall crisis management solution. The focus is not only on providing expert response consulting during the event, and financial compensation and rehabilitation following an event, but more importantly reducing a client's risk by providing 'pre-incident’ risk-management consulting, with RQA, prior to an incident.
RQA Product Risk Institute, a training company focussed on practical courses in product recall and crisis management, will soon be rolling out a series of certified training programmes in Product Recall and Crisis Management across Australasia.
Chartis clients have the ability to attend these courses using their risk management funds available under their Contaminated Products Insurance policy.