The U.S. food industry is facing extraordinary challenges as our global food supply network becomes increasingly complex. There are multiple players in the network from every corner of the globe with varying standards of safety and oversight. And as product moves through this global network, accidental contamination, malicious contamination and even product extortion are all real threats.
Quality control is an enormous challenge in this industry, and food product recalls have increased in frequency and severity in recent years. Everyone is familiar with the recent recalls of spinach, bagged salad, ground beef, eggs and other products, with outbreaks of salmonella, e-coli, listeria and other contaminants. And potential targets for liability in these large recalls ranged from growers, ranchers, fertilizer manufacturers and feed distributors…to packagers, distributors and shippers…all the way down the line to food processors, retail markets and restaurants.
All of this has led to an expectation of higher food safety standards by consumers and regulatory changes by the federal government. In January 2011, President Obama signed into law the Food Safety Modernization Act (FSMA), which gives agencies such as the Food and Drug Administration (FDA) and the Centers for Disease Control (CDC) greater inspection and enforcement authority and tools.
Among the measures giving the FDA greater teeth is the authority to prevent the release of contaminated, misbranded, and potentially harmful food into the marketplace, and to order a mandatory recall.
The FSMA gives the CDC additional tools including better coordination and data sharing with public health partners and the public, and enhanced lab methods for identifying agents, detecting outbreaks, and investigating.
But all of this could be a double-edged sword for your business. More diligence in food monitoring can also mean a higher risk of your business getting caught up in a recall effort. More recalls means more businesses affected.
You also risk serious damage to your reputation if you’re caught up in a recall. You need an effective risk reputation and crisis management strategy in place, including a social media strategy, because effective crisis management can make the difference between irreparable brand damage and success. After all, when you get it wrong, your reputation is in the hands of consumers, the media, regulators and shareholders.
The changing nature of our global food trade presents serious risks to your reputation and profits, and the need for specialized business insurance has never been greater. By adding product contamination insurance or other specialized coverage to an effective crisis management strategy, you’ll be better positioned to protect your bottom line if you’re caught in the storm.
Want to learn more? Contact us for a risk assessment or download our free report, “Six Food Industry Developments That Create Big Liability and Reputation Risk.”
