The do’s and don’ts in recall management

Learning that your product may cause injuries or damage is a stressful situation. It damages normal business and may affect the company's reputation and endanger future earnings and value. But, it is possible to prepare for it and take control of the needed measures, in a professional way.

There are many measures companies can take to mitigate risks related to product liability and recall. Compliance with regulations is essential but the responsibility for product quality and related risks ultimately lies with the company itself. A crisis calls for quick and appropriate actions, based on a well-designed and tested plan.

Best practices and worst mistakes

Nick Edwards, Client Development & Marketing Manager from the RQA Group, talks about the best practices and worst mistakes in product recall management.

What happens during the first hours?

What happens during the first hours of crisis consulting in a recall case? What is the ideal way to proceed?

  • Facts are checked – test results, the feasibility of the issue being the business' fault, the number of complaints (all the same product/SKU?)
  • Risk assessment – the likelihood of the issue causing harm to a consumer/end user
  • Scale of potential issue is determined – products affected, production records/ traceability
  • Communication – recall team needs to communicate with the rest of the business about what is happening and highlight the importance of speed and the accuracy of responses. External communication should be carefully prepared, clear and concise, and consistent across all channels.
  • Leadership – it is vital that a strong leader is at the head of the recall or crisis team; someone who can work with colleagues to make decisions, delegates well and drives the action plan without getting disheartened, as it can become very stressful during a product incident.

What are some of the best actions?

What are some of the best actions to take to avoid or mitigate the total cost of the recall?

A good example from real life was when a consumer goods manufacturer approached us believing they had a global recall on their hands following reports that a part was failing, which had the potential to injure the end user.

However, after evaluating the complaints and carrying out a thorough risk assessment, it was concluded that the risk to consumers was very low and due to the lifecycle of the product, the chances of the fault happening again, were even lower.

Therefore, the client decided to modify the product and monitor the situation very closely. They were prepared to recall, if the risk level changed; but, that proved unnecessary and saved the company and their insurer many millions in recall costs.

What are some of the most dangerous mistakes?

What are some of the most dangerous mistakes a company can make after learning that their distributed products are defective and quick action is needed?

Burying your head in the sand – i.e. trying to pretend the issue isn't happening and not dealing with it, hoping it will blow over of its own accord.

Conversely – Overreacting and starting to take actions, before you have fully evaluated the issue and confirmed it is a real incident (e.g. checking test results, confirming it is not a hoax) and/ or risk assessed the situation to determine the potential impact on consumer safety.

Poor communication can also be an issue, both internally and externally. Ensuring that you communicate clearly and openly with key stakeholders (customers, consumers, authorities, the media) is vital once you have established there is an issue and that you have a clear action plan to communicate.

Social media must also be taken into consideration, as complaints can go viral very quickly. Therefore, this channel of communication must be monitored and managed very carefully.

The role of crisis management

What role does crisis management play in protecting a company's brand and reputation during a recall situation?

During a recall, how well you react and are seen to be taking consumer safety seriously can have a very positive impact on your brand and reputation. Brands that try to bury their head in the sand, deny they have an issue and are slow to react risk seriously damaging their brand, especially if customers suffer further injury or harm, after the issue was known.

Clear communication is the key, being consistent across all channels. Spelling out the issue as you understand it, a clear action plan as to what will be done to rectify the situation, and if appropriate, apologising for any inconvenience or harm caused. By doing this, you are more likely to have a positive outcome and be favourably seen in the consumers' eyes.

Article by
Picture of Matti Sjögren

Matti Sjögren

Nordic Liability Risk Management Specialist, If

If co-operates with the experienced crisis consultancy, RQA Group. Their services are available 24/7 through the If hotline. If's Recall insurance covers the cost of assistance in a crisis.

Additionally, RQA assists companies directly in planning and reviewing recall plans, training, simulation, and testing of the plans, as well as other crisis management, such as quality assurance and product safety related services.

This article has also been published in Risk Consulting Magazine 1/2017