Companies must put in place robust risk management planning and recall insurance to protect their businesses
Earlier this week US toymaker Mattel said it was recalling over 18m toys.
The recalled toys included a line of vehicles called that were found to contain impermissible levels of lead and the extension of an earlier recall of magnetic toys that were found to release small, powerful magnets.
Ian Harrison, executive director - global casualty, at insurance broker Lockton, commented on product recall and the actions companies should take to protect themselves: "This recall is a significant event for Mattel - but at least they have substantial financial resources. However, product recalls can be fatal for smaller businesses without global brands - for example in the recent case of a New Jersey importer of recalled Chinese truck tyres, it has been reported that the company expects to be able to replace about 10% of the tires before running out of money and going bankrupt.”
He added: “Product recall is headline news, with a number of major recalls in July Alone including Mattel toys, Toro garden equipment, Castleberry canned meats and Washington State beef.”
"The legal and regulatory standards of consumer protection are rising all the time and companies must learn from these experiences and put in place robust risk management planning and recall insurance to protect their businesses against future recalls."