Food chain 411: Could your business survive an outbreak or recall?

By Higginbotham on July 13 , 2017

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We’ve all witnessed the unfolding drama with our food supply in recent years – the recalls of ground beef, spinach, bagged salad, eggs, and other products, and outbreaks of e-coli, salmonella and other contaminants. The bottom line: With an increasingly globalized network of growers, manufacturers, packers and distributors, the supply chain is more complex than ever.

According to estimates from The Centers for Disease Control and Prevention (CDC), one in six Americans becomes ill every year from contaminated food or beverages, and more than 250 different foodborne diseases have been identified. FDA statistics on recalls show that some type of action is taken against a food-related business nearly every day.

The statistics are sobering. And for the companies wrapped up in lawsuits, the damage can be devastating and multifaceted – financial, legal and reputational.

Just ask the folks at a popular fast-casual Mexican restaurant. Over a period of several months in 2015, hundreds of customers across the nation became ill in six separate incidents involving norovirus, salmonella and E. coli. It was a devastating, slow-motion disaster. The company was hit with class action lawsuits and grand jury subpoenas, and subjected to federal investigations. Company sales fell dramatically in the last quarter of 2015 and its stock fell 30 percent. The company also lost a great deal of trust with the public, not only due to the contamination, but also due to their handling of the crisis.

Three ways to protect your products, your business and your reputation:

  1. Keep your food products safe. Insist on strict adherence to safety guidelines for handwashing, food handling, proper cooking temperatures, packaging and shipping to avoid cross contamination.
  1. Be prepared for the worst. Make sure all employees and supply chain partners know what actions to take in the event of a contamination or recall event. Be prepared to communicate with customers, the public, regulators, attorneys and insurers. Be diligent with recordkeeping, labeling and tracking to be able to inform consumers, vendors and regulators what products are affected. Test your plan regularly with various what-if scenarios, and reevaluate your plan after any event.
  1. Protect your business with robust financial protection. When you consider the multifaceted costs, inconveniences and challenges you could face in the fallout of a contamination or recall event, having financial protection for these risks is no longer optional – it’s a matter of survival. You need specialized insurance for your specific risks, and the coverages you’ll want to consider include contaminated products, product recall liability and business interruption.

While you can control your own operations, you can’t control the other players in the global food network, many with different standards of safety and oversight. That’s why a food-specialized risk management program is essential. Whether you’re a food manufacturer, grower, packer or distributor, Higginbotham has a business insurance solution to protect your bottom line from today’s evolving risks. Contact us today.


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