More than one billion units of food, drugs, medical devices, automobiles, and consumer products were recalled in the United States in 2021, according to Sedgwick’s latest ‘State of the Nation Recall Index’ report, making 2021 the second year in the last decade to surpass the one billion milestone.
The medical device industry led the way, with 602.5 million units impacted in 2021, which was the highest number of units recalled in the past 10 years. Other sectors saw declines in the number of units recalled. The automotive industry had 28.4 million units recalled in 2021, approximately 44% fewer than in 2020. Meanwhile, both the consumer product industry and the pharmaceutical industry experienced five-year lows in the number of units recalled, with 218 and 274 units recalled, respectively. Food recalls also continued to decline, with just 414 recalls in all of 2021, marking the fewest recalls in the past 11 years.
Now, Sedgwick - a global leader in recall and remediation services – has warned that heightened regulation and enforcement activity from entities like the Consumer Product Safety Commission (CPSC) and the Food and Drug Administration (FDA) could lead to greater recall exposures in 2022. In particular, regulators are taking a firm stance on compliance, reporting, enforcement, and oversight – which is why Chris Harvey, Sedgwick senior vice president, is encouraging all companies to review their recall management, crisis, and communications plans now, “before the regulators come knocking”.
Read next: Sedgwick unifies global training programs
“It’s not a matter of if something’s going to happen; it’s when,” said Harvey. “Crossing your fingers and hoping it’s not going to happen to your company just doesn’t work out; it’s only a matter of time, and it’s important to be prepared in advance. I think companies absolutely need to look at the current market they’re in, the current product line they’re in, and they need to understand how to reduce the risks if they were to have an issue. It’s much better to be prepared up front.
“I recommend taking a look at the data that’s readily available - whether it’s CPSC data or FDA enforcement data – to see: Are there recalls on products that my competitors have, or similar products that I distribute? What can I learn from that? Why did it happen? Can I prevent that? What were the steps taken in that corrective action, and what were the lessons learned? Honestly, nobody wants to look at their product – especially in consumer goods or medical devices – and think about what could go wrong or what issues could occur with a recall, but it’s a really important exercise.”
If product recalls aren’t managed properly, they can spiral quickly out of control and cause a lot of brand and reputational damage, which can be very costly. It’s important for organizations to have a bespoke recall plan, according to Harvey, rather than a one-size-fits-all approach or recycling a plan from the past.
He said: “Technology is changing every single year, so they need to take a look at: What are their products, and what are the best methods to manage a recall today, from a best practice standpoint? I always recommend running a mock recall, testing the plan, and testing traceability, to figure out: How easy is it to pull data? Do I have direct consumer data? Who are the stakeholders that are involved? You might distribute product to a retailer or distributor – how do they engage consumers or patients in a recall situation? It’s really critical nowadays to understand what that looks like, or even have contracts in place with them, so that it’s clear on the responsibilities and who needs to do what in that type of situation.”
The communication plan is also critical, Harvey stressed, and should be based around how the organization typically communicates with end-consumers, whether that is through text messaging, social media, email, or in-person. Communication needs to happen quickly, it needs to be clear, and there needs to be mechanisms through which consumers can seek more information or have any concerns addressed.
Read more: Sedgwick reinforces board of directors
“It’s important for companies in a recall or any other type of remediation-type situation for them to actively be monitoring social media, because often there’s a lot of misinformation or false information, and they need to combat that,” Harvey told Insurance Business. “There’s a lot they can learn on: How do they tweak messaging on the website? Or how do they tweak messaging in the call center, and make those adjustments when they learn of those issues to try and squash a lot of that misinformation?
“You’re not going to please everyone, especially throughout social media, but there’s a lot that can be learned, and it’s important for companies to monitor that and make those necessary adjustments. But there are things they can do up front in proper recall planning to try and reduce some of that information that gets [thrown around on] social media. But empathy and transparency are really going to be important from a communication standpoint.”
Sedgwick’s brand protection experts work in partnership with clients across all industries to manage the risks and minimize the impacts of in-market business and product crises.
“We’ll come in pre-incident to help review their recall plans, we’ll help identify gaps, deficiencies, and where they may need to do some more training or run a mock recall. We like to help our clients get in front of the risk, to reduce the impact a recall could have,” said Harvey. “If they do have a recall, we often get involved early on to make recommendations around the communication, the remedy, how the corrective action should be run.
“We’re able to provide this unique visibility to some of those best practices, and then we can assist all the way through from the notification standpoint to collecting responses, collecting product, issuing out the remedy, all the way to recycling or destroying the product if it were to come back as well. We do work closely with clients, really from the start to the end, as they’re working to close out the recall and move on.”
