Study Reveals There Remains a Lot to Learn About Product Recalls

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BY:
David Fiske

Senior Vice President, Branch Manager

Lori Hunter

Executive Vice President

June 24, 2021

According to the Notre Dame study “Food for Thought: Recalls and Outcomes,” there is a lack of information available for food businesses regarding the underlying product recall process that companies go through to identify contaminated products and remove them from the supply chain. This issue is only exacerbated by the fact that the process is often widely varied.

“To help fill this void in the literature and to close the gap between what we know and what we need to know about product recalls, we use a grounded theory approach to develop midrange theorizing about food recalls. [When we do] so, our findings reveal that two manifestations of complexity — upstream and downstream — introduce recall uncertainty, which is the driving force behind why the recall process varies,” said Kaitlin Wowak, Associate Professor of Information Technology Analytics and Operations in Notre Dame’s Mendoza College of Business.

The study shows that product recall events don’t always fall neatly into specific recall categories, but more often take on recall layering — an event where there are multiple, individual recalls nested within an even larger recall. According to the study, not only can these “nested recalls” change in scope from recall to recall, but they can also morph into even more events as the larger recall unfolds.

Why is this so important for your business clients to know? Because understanding as much as possible about the recall process and chain of events can help them gain insights into the specific recall situations they may be up against. As a result, they can better reduce product recall uncertainties and understand all available options when putting together a proactive risk-management program.

“Assume a [business] initiates a recall [event] that has a high degree of upstream complexity. A nested recall within that larger recall could be effectively managed with a deferral recall option. Once the [business] has a better understanding of the situation, the next nested recall that emerges may be effectively managed with a [more scaled] recall option,” said Wowak. “Understanding that recall layering may be present can help companies segment a recall to more effectively manage it.”

Every minute that a tainted food product remains in circulation increases the health risks to the public. Better understanding the recall process allows businesses to help close the gap with the right product recall insurance coverage.

We have the expertise and markets to provide your clients with comprehensive product recall insurance to help them get on the road to financial and reputational recovery.

To learn more about our products and services or for answers to coverage questions, please contact Lori Hunter at 213-236-4585 or lori.hunter@amwins.com, or David Fiske at 312-465-5305 or david.fiske@amwins.com.

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