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July 18, 2018

“Recalling” the E.coli Outbreak; Shield Your Exposure

Since the deadly E.coli outbreak connected to romaine lettuce was announced on April 10, 2018, there have been 197 people infected, 89 hospitalizations, and five deaths across 35 states. If those numbers don’t stop you in your tracks and make you think about what you’re doing to protect your business, then I don’t know what will.

As we look back on the way this outbreak has impacted the industry, you can see the devastating ripple effect that being unprepared for such events can have. Whether you are a family farm, major producer, retailer, restaurant owner, or consumer, this outbreak has left no aspect of the industry untouched.

When thinking about possible outbreaks that could occur in the future and protecting your business from product recalls, it may be hard to believe that a situation like the romaine event could happen to you. I’m sure many of you are thinking right now, “This will never happen to us.” But in this day and age, anything is possible. The important thing is not whether it is going to happen, but it is being prepared for the worst case scenario.

Now is the time that you should ask yourself some very important questions: Do you know the full costs of a product recall and what it could do to your business should you be impacted? Along the lines of protection, how do you round out your food safety team? How would you deal with a possible contamination event? How do you educate your employees? How do you recover? How long will it take?

What many people don’t realize is that when it comes to recall losses, there is a huge gap between the perceived expenses and reality. Many people believe the highest losses are incurred in the areas of logistics and retailer charges, but, in reality, the highest losses are usually in the loss or replacement of stock and in the interruption to your day to day business. Both of which could be lessened with a little more preparation.

The main areas of contamination exposure are liability of your product; loss of your product; income interruption, whether it be loss of income or extra fees; and various recall expenses. This also includes liability to directors and officers in that they can face civil and criminal liability.

However, there is a light at the end of the tunnel. This light is a well-rounded recall policy. The benefits of a recall policy include balance sheet protection, as well as profit and loss protection. This can help cover recall losses and expenses associated with brand damage control. Another benefit is brand and reputation consultation, where experts can help you manage the effect that the contamination event might have had on the public’s perception of your business. The benefit of recall coverage could even include first and third party protection for anyone else in the supply chain who may have been impacted.

Producing safe products and building confidence in your brand is a primary focus of your business and ours. Over 1,000 food and ag-related companies rely on Western Growers Insurance Services to help protect their businesses. Western Growers Shield™ is our latest product evolution, bringing together the whole of our experience and connections with industry partners to deliver a comprehensive product recall management solution.

Ultimately, we want to save you time and money, protect your brand, preserve your supply chain, and trigger the right insurance coverage for your business. The next recall situation our industry faces is not going to be nice and gentle. It is only going to get worse and with more devastating impacts on those who do not prepare now. I will leave you with one last question, how are you going to shield your business from potential contamination events?

If you would like to learn more about Western Growers Shield, feel free to call me at (602) 757-7869.