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The Cost of a Recall
The total cost of a product recall is often hugely underestimated. As well as the more obvious practical costs, there are many intangible costs that can mount up to make a product recall very costly.
A product recall can have a big impact on brand reputation which can cause long term effects on sales and can even cause a business to go under. Many companies choose to mitigate the financial impact via recall insurance, but do you fully understand the potential costs?
Why don’t you estimate the cost of recalling your leading brand? Use the cost estimator below:
Cost Estimator
| Cost Type | Limited local recall Widespread multinational recall | Comment |
|---|---|---|
| 0 |
Hidden Costs
Other costs after the initial recall action to add onto your final bill. These may impact your business months or years after the recall:
- Reduced sales
- Reduced profits
- Increased regulatory scrutiny by government authorities
- Increased testing and quality assurance / safety procedures
- Unfavourable resolution of litigation
- Ongoing legal fees
- Prosecution of members of the board of directors in relation to product safety breeches
- Risk of increased insurance premiums
- Cost to reputation
- Reduction in share price and therefore company value.
- Cost to change or correct manufacturing process
- Increased threat from competitors
And finally…
In the long term, the biggest of the other costs could be intangible brand damage. How you respond to the product recall can determine whether it becomes a major crisis and damages your brand in the eyes of your consumer and investors. Alternatively, a well-managed product recall is quickly forgotten. Don’t end up as a case study for poor crisis management!
Other relevant services
RQA Group specialise in crisis management and offer a comprehensive and customised service throughout the whole process.
RQA Group can assist you with all aspects of business continuity, from creating a new Business Continuity Plan, assisting in understanding your risk profile and more.
The best way to reduce your product recall risk if you are a food manufacturer is to have a comprehensive food safety and quality programme.
“RQA Group have provided risk management consulting and training to our businesses around the world for many years. They have also helped us to ensure we are prepared for product recalls and business continuity challenges. They are highly professional and expert in their field and we consider them a valuable resource across the business.”
Tom Richardson,
Group Insurance Director
Associated British Foods plc
“The Speedibake Crisis Management Committee were put through their paces in a crisis challenge test by RQA Group. It was a tough but rewarding day and the team performed well together. This puts us in a better position to effectively manage potential crises in future. Thank you RQA for making it feel so realistic!”
Peter Wilcock,
Technical Manager
Speedibake
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