How to handle a product recall

Oh no! Your product has a problem and you need to undertake a product recall. Product recalls are stressful times and require careful attention and planning to make sure you handle your product recall effectively.


Understand what the purpose or aim of your product recall is:

Product recalls may be triggered by numerous factors. Understanding the purpose or aim of your product recall is essential.

Why are you undertaking this recall? Is it proactive or reactive?


Consider how you will reach and connect with customers

Depending on the size of your company and the breadth of your product recall, you’ll need to start identifying how you will reach and connect with your customers.

Will you need to employ new people or deploy existing people to ensure your teams can facilitate your product recall and manage client communications?


Tip: Consider incentivising customers to participate in your product recall, this can lift the level of product returns you achieve.


Define clear messaging both within your organisation, with customers, suppliers and governments

Product recalls often involve a wider range of stakeholders. Some possible stakeholders include your employees, board of directors and shareholders, beyond your organisation are your customers, your suppliers, Governments and regulators.

Ensuring that you have a clearly defined message that is consistent with the reason for your product recall is essential. Mixed messages or different messages can lead to confusion and possibly lead to further erosion of trust in your organisation.



Determine financial impact/costs of the recall – do you have adequate insurance coverage? Now and into the future

Product recalls are expensive and costly exercises. Product recalls can erase profits, reduce your working capital and impact cash flows. Insurance can be sourced to cover product recalls, however, insurance will need to be in place in advance of you undertaking your product recall and outside of any exclusions or waiting periods.

When you experience a product recall event, the costs materialise and the severity of the event becomes very evident. Considering, with the help of an insurance broker like Urban Insurance, whether your existing insurance policies are sufficient helps to prepare and empower you in the event of a product recall.


Tip: Reflect on why the product recall occurred and what you could have put in place to reduce the severity of impact on your business.


Build corporate knowledge and apply changes to future processes and procedures.

Product recalls provide a valuable time for organisations to build corporate knowledge around their business processes, operations, communications and procedures. Make sure to capture this corporate knowledge and enable your experience to influence your future decisions.

The best time to talk with an insurance broker is now, before you experience a product recall, to understand your coverage and ensure that your existing insurance policies can provide as much coverage as possible. This is an important aspect of risk analysis and reduction for any business and Urban Insurance can help you to prepare.

Talking with your insurance broker during a product recall event may help your business to navigate the complexity of a product recall by claiming on your insurance and minimising the crippling costs that can come with a product recall. Contact Channelle Ricketts today!

Join the Discussion