Preparing for product recall: risk managers may need more than general liability to insure against recall loss

Risk & Insurance , April 1, 2003 by Mindy W. Toran

A rash of product recalls in U.S. poultry processing plants last fall has once again brought to bear the importance of preparing for a product recall. The challenges in dealing with a recall are numerous. They include legal, financial, regulatory and operational issues. But careful planning and risk analysis can prevent a manageable problem from becoming a catastrophe.

The case of two poultry processing plants in the Northeast illustrates the risks and opportunities involved in product recalls.

Last fall the Centers for Disease Control and Prevention (CDC) and the U.S. Department of Agriculture's Food Safety and Inspection Service (FSIS) began investigating an outbreak of listeriosis that sickened at least 53 and killed eight people in eight Northeastern states.

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Pilgrim's Pride, a Philadelphia-area poultry processor, and J.L. Foods Co. Inc., of Camden, NJ., voluntarily recalled more than 200,000 pounds of poultry products each after their plants were found to contain strains of listeria similar to the strain identified in the Northeast outbreak.

Pilgrim's Pride, which processes and distributes poultry under the Wampler Foods brand, initiated a voluntary recall of more than 295,000 pounds of turkey and chicken in October. The recall quickly expanded to 27.4 million pounds of poultry within a week. No illnesses associated with the strain in the Northeast outbreak were linked to any Wampler products.

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