0:04
Good morning, everyone, and welcome to today's webinar, which is on Navigator Food Contamination, Reporting and Responding to Incidents, hosted by our professional affiliate members, Bram Jacobson, who are joined by Lockson. First of all, thank you to everyone for coming today.
0:18
We hope that you find the content useful.
0:21
There will be a Q &A at the end, so please put any questions that you have into the questions box, and we'll do our best to go through as many as we can at the end of the webinar.
0:29
We'll also be doing a few polls, so please engage and put in your answer when they come onto the screen.
0:34
The following webinar will be sending you an aftercare email in the next couple of working days and this will contain a recording of the webinar, a copy of the slides and the contact details of today's presenters.
0:44
So without any further ado, I will hand you over to today's host, Amber.
0:50
Thanks Luke. Good morning everybody. Thank you for joining today.
0:56
We're just going to do a quick introduction to say you know who we are.
0:59
So I'll kick off.
1:01
I'm Amber, I'm a Principal Associate at Brand Jacobson and I sit within the Commercial Disputes team.
1:10
Rachel, do you want to go next?
1:11
Hi, morning everybody, I'm Rachel Lynn.
1:14
I am a partner in the Criminal Compliance and Regulatory team based in our Birmingham office, sitting also on our food and drink sector alongside Amber.
1:23
And I'll hand over to Freddie.
1:25
Hello, everyone. My name's Felix Statham. I'm a product recall broker here at Lockton.
1:30
In my role, I help service over 350 global clients on all aspects of product recall insurance.
1:35
Of our 350 clients, around 55% of them are food and beverage manufacturers.
1:41
I'm part of a team of fightbreakers, and our team is supported by three claim specialists, one of whom is joining me today. Mike.
1:48
Thank you, Freddie, and thank you, Russell, and thank you all for joining today.
1:51
My name Michael Brown.
1:53
I work within the Property and Casualty team, specifically targeting, as Freddie has introduced me, as one of the three that work on the food and beverages and product recall. I've got 43 years working in the insurance industry, U.S.
2:05
casualty liability, et cetera, and I sit within the Property and Casualty team, also within Lockton.
2:12
Thanks, Michael.
2:14
So, we are going to just run a couple of polls now, just to get an of what experiences you've had.
2:21
So Luke, if I could hand over to you and if you could all get involved in the polls, that'd be great.
2:28
Cool, so the first one should be open now, which is have you experienced a food contamination event?
2:34
Any answer, yes or no?
2:36
I see most of them are coming in now.
2:39
We'll just give you guys a few more seconds to get your answer in.
2:49
And there are the results.
2:51
Sorry, 71% have said yes, and 29% have said no.
2:57
Great, thank you.
3:04
The next question is, do you have a crisis response plan to guide you through a food contamination event again?
3:11
Either yes or no.
3:19
This seems to be a very, very clear winner for this one.
3:23
Yeah.
3:24
It's 89% of you have said yes.
3:27
That's great news.
3:28
That's very good news, I think.
3:32
The final poll is, do you have product recall cover?
3:45
It looks like we have another very overwhelming winner.
3:49
Here, I'll just give you guys a few more seconds.
3:55
And again, we have 85% of you said yes, and 15% no.
4:01
Perfect, thanks, Lee, that's really interesting.
4:03
So, the reason why we've put this webinar together is simply because we've had an influx of foreign contamination claims over the last 12 months, and Rachel and I have been working on those together.
4:18
A lot of these have resulted in recalls, and especially for smaller businesses, we ask the famous question whether you have product recall insurance, and the answer is and know, which can be quite catastrophic for some of those small companies.
4:34
So as an outline of the presentation today, the discussion points are going to be around the legal obligations and liabilities in the event of food contamination, the role of supply chain management in preventing contamination, the importance of having robust intolerance coverage for product recalls, strategies for effective communication during crisis do mitigate brand damage.
5:04
This is going to be scenario-based, so I'll kick off the scenario, and this is going to be about contaminated berry blast smoothie mix.
5:18
So a UK company, FreshSip, produces a product called Berry Blast Smoothie, which is distributed to various supermarkets and health food stores across the UK.
5:31
And this product is made from a blend of strawberries, blueberries and raspberries sourced from different suppliers within and outside the UK.
5:40
An incident has occurred and I'll let you flick through that on the slide, but ultimately there's been several customer complaints of people falling ill.
5:52
The complaints are escalating and the issue has gained media attention and Freshchip's internal quality insurance team has initiated an investigation and has discovered that a batch of raspberries from a Spanish supplier may be contaminated with neurovirus.
6:11
So I'm just going to pass on to Rachel now to discuss the legal and regulatory steps around this.
6:18
That's great, thanks Amber.
6:19
I'm not going to attempt to say the name because Amber has chosen a tongue twister that I literally fall over every time I say it.
6:25
So we'll just talk about the product and then I'll, I'll, I'll avoid that tongue trip.
6:31
So the starting point, we're looking at the scenario because I think it's really helpful to have something that flows through this, this conversation.
6:39
But really I'll try and open it up to a broader issue because contamination can come in all sorts of forms.
6:46
So you can have physical contamination in the manufacturing process with defective packaging or equipment that's used to make products.
6:54
You can also have contamination by reference to allergens that were put into a particular product unexpectedly and in an uncontrolled way.
7:06
Also, you can have this sort of contamination issue clearly where there is a defect with something that's been provided you by the raw ingredient supplier that then contaminates the end product.
7:16
The starting point for all of these things when you're considering what you need to do as a food business operator is Does that contamination make the food unsafe?
7:27
And by that we go back and look at the core piece of regulation and that talks about whether or not the contamination makes the food Injurious to health or unfit for human consumption.
7:37
Now, that's not a legal question That's not something if you phoned me tomorrow at the start of a crisis that I would be able to answer that question for you that requires you to undertake a raft of checks against your supply chain, against your manufacturing process, your packaging processes, how your product moves through the supply chain to determine what is the contamination?
8:02
How has it got into your products?
8:05
And what is the risk of that contamination?
8:08
And that will often, for those of you that are fortunate enough on this call to have a technical team, that will really engage that team in that crisis response and there'll be a really critical element of you determining what is the risk and whether or not you are satisfied either that the contamination doesn't make the food unsafe or it does and the steps that you need to take following that.
8:31
Now one of the elements that's really critical and it's one of the obligations based on all of the food business operators to a certain extent is traceability.
8:39
And I'm sure given the responses we've had in the polls to your knowledge and understanding and experience of these sorts of events, that you'll be very familiar with the term traceability and what that means within your organisation.
8:53
The short form term we always use is, are you able to trace one step back and one step forward, depending on where you are?
9:01
And if you're the end retailer, clearly you won't be able to trace one step forward because you are the end.
9:08
But that general principle of being able to, for all of your product, for all raw ingredients and how that makes its way into producing the final product, you really are, it's incumbent on you to have really robust traceability systems and processes in place.
9:24
It's a legal requirement for you to do that, but also it is invaluable in the event of a food contamination risk.
9:32
And I know that most people on this call, I'm sure, you know, from the smallest food business operators right up to sort of multinational businesses, will affect some sort of system around approved suppliers that really does help you manage and mitigate the risk of some of these contamination issues that can be brought in when you're purchasing products or packaging material is to have an approved supplier regime.
9:57
In many cases, lots of you will either be subject to audits by your supply chain or will require auditing of the supply chain yourself and that really can bring in a really robust system of controls that might, in many cases, avoid you finding yourself in this situation in the first place.
10:15
But you do need to be able to trace the product from start to finish.
10:20
One of the really critical and important reasons why traceability plays such an important part when you have a food contamination issue is, of course, what you absolutely want to avoid having to do is a full recall, because you have not been able, through your traceability systems, being able to limit the recall to a particular batch of products.
10:41
That can be pretty catastrophic for a number of reasons in terms of the complexity of that recall when you're not able to limit it to a batch or a particular date range within that product cycle.
10:56
But it also can cause real concern amongst the supply chain that you supply to in terms of how good your systems of food safety management are if you're not able to limit the recall and that can impact confidence not just in respect of this particular contamination issue but also going forward and Amber and I have seen that where it can cause in the supply chain you know that real loss of confidence and trust going forward when you get to the other side of a food contamination issue it really can cause you problems going forward as you try to rebuild that trust and confidence but also a poor traceability system can really impact the regulatory risk, the risk of enforcement action being taken by the regulator if during the process of dealing with the immediate crisis, they're not satisfied that your systems are robust and comprehensive.
11:48
It can persuade them to pursue a more formal investigation and enforcement action, and absolutely clearly it can impact your ability to be able to defend those enforcement actions if that's the route that the regulator takes.
12:03
So traceability is really critical, it's a really critical element of any food contamination issue and the starting point is always to ensure that that system is as robust as it can be and that you test and challenge it through audit processes both internally and subject to third party audits as well to make sure that you have it.
12:24
You will in some instances, I'll deal with this separately, be required to notify the regulator.
12:30
The ability to be able to share traceability information with them in a usable format is also really important.
12:39
I've certainly had cases historically where internally clients have access to traceability information, but actually their ability to share that in a format that can be interrogated and understood by the regulators isn't really there, and that can cause delay and, again, can impact your relationship with the regulator at an early stage. So you've identified that your food is unsafe. What are your responsibilities?
13:07
It's quite often a question I get asked about, you know, do I have to recall?
13:11
Well, your immediate question, is it unsafe?
13:14
And if the answer to that is yes, then possibly, but only if it's left the control of your premises.
13:20
So if you've identified a contamination issue within the confines of a manufacturing facility, for example, and it hasn't left your building, then no, you're not required to recall it because it hasn't entered the supply chain so as to be a risk to the end consumer.
13:37
And in that situation, you can affect a withdrawal process instead, because you are then preventing it from reaching the end consumer.
13:47
A recall will be necessary where your product has got out into the market, it's on the shelves in all of the big supermarkets and convenience stores, and there is a risk either that consumers have already purchased and consumed it, or they will if you don't take immediate action.
14:04
Customer information is really critically important, and I have, not so much lately, I think the guidance that the FSA produce and just businesses' awareness of the critical importance of good customer information has made this less of an issue now, but the clarity around the information you share with the end consumer about the risk, the batch, sort of visual photographs of the products that they have, real clarity around whether or not what they have bought and possibly consumed is the product that is being recalled is really important as is working in the situation where you're not the end retailer, working very closely with that supply chain to make that that messaging is very clear and unequivocal so that you ensure that you get the recalls that you need and the returns from the consumers that you need because ultimately you'll have to marry up what has been sold with what comes back to reassure the regulator that you are doing all that you can to make sure that that risk is removed from the public domain.
15:08
Notification as well, I'll come onto that separately, but there will be circumstances in which you're obliged at a very early stage to notify the regulator of this issue as well.
15:18
Amber, can I have the next slide, please?
15:20
Amber Rees Yes, sure.
15:21
Amber Rees Great.
15:24
In this particular scenario that we talk with, they've done their risk assessment and they have decided that there is a risk to the end consumer and so they have issued a voluntary recall working closely with the retail supply chain as well to make sure that messaging comes across, they use all of the various, I mean, we're very lucky today, you know, a number of years ago, a recall was difficult.
15:45
If you didn't go into a shop and see the till point notification, you could often miss it.
15:50
But with social media presence for lots of businesses now, it's much easier to get the messaging shared really far and wide to try and ensure that we get those customer returns as quickly as possible.
16:02
They've also made the decision that they will notify the Food Standards Agency, local authority, and in this case, this company has a primary authority.
16:11
And I just flagged that for people on this call about really how valuable that primary authority relationship is, if you have one, to help steer and navigate you through a crisis like this.
16:23
Often, it surprises me when I speak to a few business operators who have a brilliant primary authority relationship.
16:29
And in the midst of a crisis like this, they don't think to reach out and get their support.
16:34
So I would actively encourage people on this call to engage that support as well, because they will be your champions as well when the FSA and local authorities are investigating.
16:45
So use that relationship and that champion of you as a really credible food business operator that does all of the right things.
16:54
And also the important thing, we've engaged the supply chain, we've told them about the contamination, we've told them what our plan is, we've worked with our retail customers so that they have been engaged with our recall campaign, they've looked at the recall notices, they've agreed to share it on their social media and their websites.
17:13
So we have a really clear plan of action and it's being instigated and implemented as quickly as it possibly can to mitigate that risk.
17:23
Onto the next one, please, Amber.
17:27
Yeah, the notification to the authorities.
17:30
It is an absolute requirement to notify the authorities if the product is unsafe and presents that risk of being unfit for human consumption and injurious to health. You must notify them. It's not a choice. You don't get to have a debate about it.
17:46
You must, because you'll understand on this call for people who have had this, their role is actually really vital in getting the messaging on.
17:55
You will all know on the FSA website that they issue recall notices, that they will share all of that information through through their own website and their own social media campaigns, and lots of people within the supply chain will sign up for those notifications.
18:11
If they're not immediately aware, they will get alerts if there is a problem as well.
18:15
It plays a number of functions, but that notification point is really important. You don't have to notify the regulator.
18:24
I go back to the withdrawal point.
18:28
If you have identified a problem within your organisation and the product has yet to leave your premises because you've identified it and you're absolutely certain that no food has been contaminated, has left your premises and entered the supply chain, then in that situation you're not required as a matter of law to notify the regulator.
18:51
But what is really critically important.
18:54
It's really akin to health and safety where you have a near miss, something nearly happens, you nearly injure somebody.
19:01
You do an investigation to learn lessons from that.
19:04
Similarly, if you identify a contamination issue during the manufacturing process, for example, whatever stage it might be, it's really important to do a really detailed dive deeply into an investigation to work out what went wrong, how did it happen, were we lucky to identify it, or was it because of other processes and systems we have in place?
19:27
Is there anything we should and could be doing to strengthen the way that we manage that risk already and then update any of your policies, procedures or processes to implement those learnings from that incident?
19:41
So even though you might not need to make a formal notification, it doesn't mean you don't have any obligations and you don't need to do anything at all.
19:48
You absolutely do.
19:51
The notification period is typically unhelpfully vague, as in as soon as possible.
19:58
So again, it will very much depend on the risk.
20:02
So if I give you a very clear example, if it becomes very abundantly clear to you that some of your product has been contaminated by an allergen that isn't on the ingredients label, so consumers are not aware that that product would contain an allergen, you have to act really quickly because the risk of that is potentially catastrophic and it only takes one individual to consume something that they're severely allergic to and it's not unheard of for that to result in a fatality.
20:34
In that situation, you'll sometimes and often will be required to go to the regulator really before you've made your plan.
20:42
And so you'll be working alongside the FSA and the local authority to work out your plan of action.
20:49
But really what's critically important is getting the messaging out there as soon as possible because you need to remove that risk immediately because the consequences of that risk eventuating are so very significant.
21:03
So it is, again, I would expect it, and it's so encouraging to see that mark in terms of the poll about how many of you got a crisis management plan.
21:12
I cannot say it's stressed to you how important it is that your crisis management plan isn't a one size fits all, that you do think about all the various contamination issues that might impact your business and how you would deal with each of them so that in the face of dealing with something like this on the day, you're not sort of scrabbling around trying to work out and what do we do, who's gonna take ownership of that, who do we need to collaborate with, who do we need to engage with that you have all of those sort of scenarios worked out.
21:43
I had a client a number of years ago who had a very serious food contamination issue and a wonderful crisis response plan, but I can tell you they didn't go to that crisis response plan when the issue arose. They all still panicked.
21:57
So if I can get one thing across to you on this webinar as a sort of a lesson learned from that experience for me with that particular client is it's great you've got a policy and it will really stand you in good instead, but test it.
22:11
Test it in an environment where you're not in the face of a crisis, just to see if it works. You will absolutely find gaps. You will absolutely find issues.
22:20
And that's your opportunity then to address those and really reinforce your crisis response plan to make sure it is as effective as it possibly can be.
22:29
And please, in the event of an issue like this, go to it.
22:33
You know, that is your toolkit to get yourself through what can be a really intense window of responding to a crisis of sometimes a couple of days, sometimes a number of weeks, depending on the extent of it.
22:47
So use that as your guide to get you through the crisis and make good decisions really well and effectively.
22:56
So I think next slide for me, please, Amber.
22:59
So yeah, the supply chain, critical.
23:02
No one food business operator sits in isolation of the others.
23:07
We dealt with something, Amber and I last year, and I'm sure it's really familiar to all of you.
23:12
Some of you may have even been affected by it, which was the nut allergy that came from mustard seed last year.
23:19
Now actually that contamination was traced all the way back to the field and the fact that the mustard seed had been stored in a container that had previously stored peanuts and hadn't been cleaned out correctly.
23:32
So you have to have that knowledge understanding that the risk can come, you know, that I hate this saying, but I'm going to say it, but sort of farm to fork can happen anywhere along that process.
23:42
And it's really important as I go back to, you know, the traceability elements, making sure you have got a really strong supply chain approvals process that you know from your supply chain where things come from and that critically when you have an issue that you collaborate, this is not the time to worry about claims, they will come, I'm sure, both supply chain claims and consumer claims for harm, but really it is essential that you collaborate and talk to each other as key stakeholders, all of whom will have their own responsibilities as food business operators to try and mitigate this risk as quickly as possible.
24:24
So Amber, over to you, because I know that obviously from the supply chain point of view that you're gonna come in as well.
24:28
Yeah, thanks Rachel.
24:31
So I think the next thing to consider really is just the review of contracts and obligations, which tends to be more my bag in these kind of situations.
24:45
So what we would generally look out for when reviewing supplier contracts is obviously the liability so it would be checking for clauses that specify who is liable in the event of a contamination, and that includes understanding the indemnity provisions and any limits on liability that might affect the ability for you to claim damages.
25:09
There'll also be, we'd hope, quality assurance and compliance provisions.
25:14
This should include obligations for regular audits, testing and certifications from all parties in the supply chain, so that's something we would need to test and get information in relation to.
25:29
There is also likely to be notification requirements in the contract, so this is looking out for clauses that outline the procedures for notification in the event of a contamination issue, and this will include who needs to notified within what timeframe and specific steps follow after the notification.
25:51
And sometimes in these situations, our clients will want to consider termination of the supply contract as well.
25:58
So we'll be reviewing the conditions to establish whether or not there's been a breach related to the food safety issue.
26:06
And that includes understanding any penalties or consequences associated with the termination due to the contamination.
26:15
There's also likely to be a dispute resolution procedure as well.
26:18
We'll be examining the methods prescribed for resolving disputes related to contamination issue that's occurred, and that could include mediation or arbitration procedures.
26:31
It will also specify governing law and jurisdiction as well, which is particularly important in supply chain disputes and establishing that really early on.
26:41
And I think all of those points that I've mentioned are critical really for managing the risk and ensuring a swift response in the event of a food contamination issue in the supply chain.
26:54
So next, I'm gonna hand over to Lockton to talk about notifying your insurer in the event that this issue arises, which is particularly important.
27:09
Great, thank you very much.
27:10
If you could just flick to the next slide quickly.
27:13
So what we want to do is spend time just looking at the insurance and how it can help support you through a recall.
27:20
So what I'll do, just taking a step back, is provide a brief overview of the product recall market.
27:25
And then where we want to focus time is on best practices in the event of a claim.
27:31
And we'll take you through our claims best practice document, which is something that Lockton provide to all their policyholders.
27:38
The document aims to support policyholders in setting themselves up for the most efficient claims process in the event of an incident.
27:46
So as a reminder, product recall insurance is principally a first-party policy providing balance sheet protection in the event of a catastrophic loss.
27:56
The policy is also going to cover third-party economic costs passed back to policyholders in the event of a recall.
28:02
Now, because product recall insurance looks to cover the catastrophic loss, it is one of the reasons why it is more expensive than a product liability policy, for example, that it's typically compared to.
28:16
Primarily, the policy trigger when an accident occurs in the manufacturing process, which is going to render the insured product to either have caused or have the potential to cause bodily injury when the product is used as intended.
28:29
So, as of right now, the product recall sort of market landscape is extremely buyer-friendly and there's a certain capacity in the market.
28:40
It's a great time for prospective buyers to seek options for product recall insurance.
28:45
Indications are easy to obtain using estimated revenue at a link to a website, and as well we're seeing current buyers benefiting from the market conditions with favorable renewals being achieved.
28:55
Now, not only has the additional capacity helped keep the rating environment competitive, it's also created coverage refinement and enhancement.
29:06
The product recall market now more frequently offers policyholders options to purchase quasi-quality cover, which does take the trigger beyond bodily injury.
29:17
We have been able, locked in to leverage that competitive market dynamic, and we're now pleased to offer our clients an exclusive facility for both new and current buyers of Product Recall who operate in the food and beverage sector with revenues below 100 million pounds.
29:34
The facility offers best-in-class cover, affordable premium and retention, and of course, if you would like to know more about this, then please feel free to reach out at the end of the webinar.
29:45
Paradoxically, what we're seeing in the recall market right now is it's experiencing one at the most challenging claims environment.
29:52
Bay frequency and severity of losses are rising sharply, particularly over the last 24 months.
29:58
And resultantly, what we're seeing now is insurers placing a tighter burden on their policyholders to demonstrate, firstly, that the policy has been triggered, and then added to this, they're looking at the costs associated with claims with a lot more scrutiny.
30:13
So in response to this, we have created a best practice document to guide policyholders through what to do with an event and how to notify insurers.
30:23
The document, it's been formed from the commonalities that exist amongst all claims and I'll hand over to Mike now who can take you through the document.
30:32
Thank you, Freddie. And Amber, if I could go to the next slide, that'd be great.
30:37
There we go.
30:39
I noticed that the first slide we passed over, which was notifying your insurer, and it was done in two short points.
30:47
Unfortunately, our experiences, it takes a little bit more than two short points to deal with the insurance.
30:55
So, what we have put together, as 71% of you will have experienced, is something that we've tried to cobble together.
31:02
It's not the right word, not very professional either, but what we've put together is this presentation and And it's something that can sit beside your recall plan.
31:13
And it's designed to be just highlights of what we believe and what we've experienced through the claims that we've handled, we believe are some of those bullet points that you should be handling as you go through the process.
31:28
And I hate to say it is a bit of a process.
31:31
Your time will be bifurcated.
31:33
One is actually dealing with the recall itself, the second is the notice of the insurance.
31:38
Now on food and beverage it tends to be quite a quick process. The prompt reporting aspect we highlight all the way through.
31:46
One thing that we do talk about is whether there's a consultant hotline attached to your policy.
31:53
Some of them do have crisis 24.
31:55
Now it's on the front of the policy for most people so if you have a look at that and and you're not 100% sure, so we've got 29% that haven't faced a process such as a recall, then I would prompt people to use that helpline.
32:16
But I would also say and stress that the notice to the crisis hotline is not noticed to the policy.
32:22
And that requires a specific notice through the broker to ensure that the insurers are aware of the incident.
32:30
Now, we're putting here now the detailed information, and Amber and Rachel have talked about the legal process and also the process with the health and safety standards, the FSA, the FSS, and the local authorities, but this is the insurance aspect of it, which we'll be talking about the bifurcation of time.
32:50
We need as much information as we possibly can to help and assist underwriters to determine coverage. Once we've got that, we would also ask you to preserve evidence.
33:02
Now, I know warehouse space is key, particularly on fast-moving processes, but a small sample, but agree it with your insurers to begin with.
33:14
If they are asking for the full process, don't forget that there are some areas of cover that increase costs, for example, that may cover the increased costs of warehousing the affected product before destruction authority is given. So remember that is key as well.
33:35
We would also urge you to retain as much of the packaging material, et cetera.
33:41
It's there on the preservation of evidence block that put there. Obviously, your prime concern will be your clients.
33:52
That is, we fully understand that, as do underwriters, but early engagement with underwriters will assist you with that process.
34:00
We have seen, for example, that people even putting together a simple spreadsheet is forgotten in the rush to ensure that their product, it does not harm people or other products. And documentation is key again.
34:16
Early engagement with either your broker or with insurers and their specialist can assist with at least document any subrogation efforts, for example.
34:25
And we've highlighted within the documentation and records the key documents that we've seen requested, every request for information that any adjuster that's appointed by underwriters has requested in the past.
34:39
Lots are requested there, but you'll understand and there's a lot of paperwork that is generated both electronically and physically in the event of a claim.
34:50
We, as a broker role, we are literally there to help you guide through the process.
34:56
I don't know how many other people have engaged with their brokers in the past.
35:00
I think it was, I can't remember if it was Rachel or Amber talked about testing the product beforehand and again, not just on the recall aspect of it but I'd also urge you to test your insurance because early engagement, again, if everyone understands their roles and responsibilities in the event of a recall, when faced with it, pulling two pieces of paper, which is your recall plan and your insurance contact plan, at the same time will assist you in the process and also negate any issues and bumps down the road when talking to insurers.
35:39
I would also highlight that a number of expert consultants are available under the program.
35:43
Not only insurers who will try to guide you through the process, but if you need your own facing expert, for example, a forensic accountant, for example, if dealing with a number of different issues as you go through the recall, again, they could be available for you under your policy. And from a Locton's point of view, we're here to help you through the process.
36:08
So, and I think that's basically the claims process in a nutshell as quickly as I can do it.
36:14
One of the points that I would just add to Mike's is that a product legal policy is also there.
36:24
Under the provision of a policy, it comes, it's attached to a crisis consultant who will obviously support you post-incident, but also if we talk about stress tests and that was touched upon earlier, there is also funding available in the policy for you to engage with the insurer's partners, the consultants to stress test, and they can run mock recall exercises.
36:46
And part of those costs, if not all of those costs, can be funded by a policy.
36:50
So it is also a risk mitigating policy as well.
36:55
And just to polish that off, I was just gonna say that this is a spread, this is the panel that we currently produce, but we challenge this on a regular basis.
37:04
So if there is updates or documentation evidence or anecdotes that we can add, we will add this.
37:11
But the key to it is that we try and keep it as short as concise as possible, recognising that people would rather look at one page on their desk than a booklet.
37:21
Absolutely.
37:24
Thanks, Michael.
37:26
Okay, you're welcome.
37:28
Just gonna hand back over to Rachel now just talk about consumer compensation and what considerations may be around that.
37:39
Yeah, so we know that there will be, inevitably, if people have been made unwell, that there will be claims arising.
37:47
And again, I think we all appreciate on this call that there are so many strands to this when you're dealing with a food contamination issue and a legal issue, but you really must ensure that you are setting up mechanisms to deal with all the different facets of claims and liabilities that might arise.
38:11
So establishing, again, this will be working with your insurer and your brokers as well to make sure that you have the right cover in place to start with, and then the mechanism by which you determine your exposure.
38:25
One of the first things you'll want to understand is what are our limits on liability? What does this exposure look like?
38:32
What do we need to do as a business, as an organisation, to understand the liability risks?
38:37
You will need various of these strands running at the same time. You won't be doing it all on your own.
38:42
You'll have support from legal advisors, brokers, and insurers to help you navigate through this situation, but you do need to I mean, in my experience, actually, when it comes to consumer claims for compensation, let's park to one side those really awful, very, very serious food safety crisis where somebody has very unfortunately died as a result of eating food that is contaminating and either as a result of the type of contamination, allergen, or as a result of that particular consumer having a range of other co-morbidities, they are particularly affected.
39:20
I did a case a number of years ago where 37 people were injured by some product that hadn't been, that the heat process hadn't been managed, so it had been allowed to cool down and left out and not heated, reheated appropriately.
39:35
All of those people were very unwell with an upset tummy, not very pleasant, but actually one of the individuals who had a range of health issues very tragically died as a result of that of the of the bacteria contamination in that particular product so in my experience generally and I say this very generally the risk of claims for compensation arising from a lower level recall as a result of contamination is relatively low but of course there are those outliers where you have them you know the much more serious, either life-changing, life-limiting injuries as a result of consumption of contaminated food and or a fatality, which is obviously the worst case scenario.
40:20
But again, it's making sure that both your plan accounts for the risks associated with those compensation liability claims, but that also you understand what those liability claims might look like and how you work closely with insurers to manage and mitigate some of those claims that may down the line as well. Yeah, this is me again. I've got all the slides, Amber, haven't I?
40:47
I'm realizing this.
40:51
It goes without saying, you know, when you have a food contamination, it really does expose you and it will make you feel vulnerable.
40:58
You know, you will, I have no doubt, have a really comprehensive and robust food safety management system.
41:04
And this is never an experience that any food business operator wants to go through.
41:10
You have your reputation, which will often be long fought for with lots and lots of hard work to build that confidence and trust in you as a food business operator and the products that you produced.
41:22
In all of this, your obligations to comply with the law are ongoing.
41:27
So if, as a result of the investigations you do, you identify failings on your part in terms of some of your ability to discharge your statutory duties, you know, it's absolutely incumbent on you to identify those, to call those out and to make the necessary changes to make sure that you reinforce what you do and learn lessons from this.
41:49
Really important, and I think, you know, Michael said it on his previous slide, which I have to say is a really helpful one-pager, the real importance as you go through this process, and it can get lost in the panic of just trying to deal with it, of keeping really good records of the actions, you know, demonstrating decisions.
42:06
So for example, decisions about the recall, why is it a withdrawal, not a recall, making sure you have a robust audit trail to justify that decision just in case the regulator comes to ask you why wasn't it a recall that you have that clear risk assessment and that audit trail for that decision making.
42:26
Often, following a food contamination issue, you can expect, even if there's not going to be any enforcement action in relation to it, you will be on their radar.
42:37
So have an expectation of a regulatory inspection from your local authority, and or even as part of the supply chain where those of you on this call who are subject to very regular intrusive and quite challenging audits from your supply chain, expect those to increase and to follow fairly shortly after this sort of issue because they'll want to ensure that they have undertaken the necessary checks and balances to make sure that either this was a very isolated incident or it wasn't, but you have really learned the lessons and put in place the procedures and policies to either eliminate or better manage that risk going forward.
43:20
So I suppose what I'm saying on this call is there will be lots of plates that you're spinning during this process and some of those plates will continue to spin for weeks months after an event like this and it's trying not for one of those plates to drop off and nobody be having their eye on the ball to keep that spinning.
43:38
It is really important and it always goes back to having a good plan and a good process to manage these risks is really so important.
43:47
And we do have a question which I think probably fits with what we're talking about just because rates for compliance, but the question is, is there a requirement to notify the FSA slash FSS or to the local authority?
44:02
So your obligation is to notify your local authority because you will be controlled by that local authority.
44:07
There are certain exceptions to that if you're dealing with certain products, so meat, for example, comes under the FSA's control.
44:15
The reason we reference the FSA is whilst you will notify your local authority and they will engage with you immediately understand the risks and ensure that they're satisfied with your plan.
44:24
The recall notice to make sure that that's shared far and wide.
44:28
There is a dedicated email notification address address on the FSA website so that you can get that recall notice up on the FSA or the FSS in Scotland's website.
44:38
So that's where that comes into play and depending on the extent of the contamination and how far it affects the supply chain.
44:47
So in the example we gave earlier around the mustard seed contamination.
44:51
Because mustard seed is using so many food products and went right across the UK supply chain, the FSA were strategically overseeing all of that.
45:00
It would be a nonsense to have a local authority in Birmingham managing all of that.
45:05
But if actually it's a relatively localized issue, then the local authority in which you're registered as an FBO will take the lead responsibility for dealing with that.
45:16
Thanks, Rachel.
45:18
In terms of public relations and communication, it's just part of the scenario that we're running here.
45:28
Fresh Sit maintains open lines of communication with consumers, stakeholders, and the media in this case.
45:34
I think we've highlighted during this call how important it is to keep those lines of communication open, and they are also providing regular updates about the recall process and measures taken to prevent future incidents just to restore that public trust.
45:52
I was going to open this up to Locton to see if you had anything to add about, you know, limiting any reputational damage in these situations and your experience.
46:05
Sorry, just quickly, I'm afraid, by all means, jump in.
46:09
But I think this comes back to the management.
46:14
There is that ability of the policy to pay for media and also reputational injury, but those costs can be over and above the actual policy limits outside of the first party recall costs.
46:32
So there are those situations where you could look to the policy to recover some of those and lean upon experts that have seen many, many recalls rather than just the one that you may be facing for the first time.
46:46
And Freddie, we've also had these conversations with insurers that have said that they're happy to have the conversation with clients or new clients just to sort of talk about their experiences in other recall situations as well.
46:58
Obviously confidentiality is key and they can't talk details but generalities such as what we would see what we would expect and how we could assist you in those situations.
47:13
But I would stress that it's not always, whilst we would like to say that everything gets paid on every day, sometimes there are issues that we need to discuss and resolve.
47:26
But going back to everyone's points about documentations, that documentation, early engagement, do assist with any problems under the policy or recoveries.
47:38
So we would, again, stress that.
47:40
Speaks to the role of the crisis consultant.
47:43
When you have an incident, you can get a consultant in, and their costs are covered from the ground up, so there's no retention that would apply to engagement with the crisis consultant.
47:52
And these guys are doing recalls day in, day out, and they will have the capability to assist you in how you want to message things in the media.
48:02
And it's one of the areas that you can also engage them with, pre-incident, to invest time, to get the relevant people trained in how they may respond to a media if this event becomes public and your brand is being called into question.
48:19
How are you gonna respond in the media?
48:21
The reputational impact of product recalls are where we are seeing a lot of the claims costs be stressed because of the influence and the fast moving world of the social media particularly.
48:37
Yeah.
48:37
I'd sort of add to that Freddie as well, you know, certainly within most organizations, certainly large organizations, you'll have really capable comms team.
48:46
crisis response is an area of specialism within the communications profession.
48:54
And so I have seen some really poor kind of social media campaigns and responses and engagement with the media because not intentionally but because it's being managed by people that just don't have the skill set to engage.
49:09
They're great at launching a campaign for a new product or engaging with consumers in a really effective way, but crisis response is very different.
49:19
So I think either engaging a third party to help you with that through your insurance and or using your third party insurance cover to ensure that your people are up skilled on the dynamics and the differences in dealing with a crisis response communications plan is really important.
49:36
And I can't stress that enough because again, it goes back to this, the critically important building confidence and trust following a recall incident and the communications plan you have around that and the campaign you launch around that really feeds into that for the future, not the looking back bit but the going forwards bit.
49:54
It can really have a really positive influence or a really detrimental influence depending on how you manage that comms piece.
50:04
Thanks, Rachel.
50:06
So, we're now at the end of the webinar, but we do have some time for questions, and I'm having trouble actually seeing the questions in the question box.
50:17
So, I don't know if anybody else on the call has a view, which they could just search through those. I can see we've got some, but I just can't open them up.
50:29
Yeah, I can see one, but all I can see is communication.
50:31
So, I can't see whether that's That's a full question. I don't know, Freddie or Michael, if you or if you can help us.
50:38
I can jump in there if you like and read the question out.
50:41
Oh, I was just about to do exactly the same thing.
50:43
It says here, what is the role of the customer care department as they are not necessarily trained in any technical responses to customers?
50:52
The team needs a training or this team needs a training or included as part of communications?
50:58
100% they do. I mean, they are your consumer-facing contact into the business.
51:06
So my expectation would be that your crisis response plan would include inclusion of your customer service team to be able to handle that, and also making sure that what you're doing is briefing that team, your customer service team, to ensure that there is continuity in the messaging that's being given to individual sort of consumers but also supply chain customers that might be dialing into that.
51:31
So they are a really critically important part of the process and it's a good question because often people forget to bring them in to this and they are the people fielding the calls and then you'll have seven people giving a slightly different message and then with social media today that starts to ramp up, you know, well they don't know what they're saying, I was told this and I, well I wasn't told that, I was told to do this, and that can unravel on social media really quickly.
51:59
So you have to bring them in, you have to provide them with a briefing.
52:03
If you update something, you absolutely have to ensure that that cascades down to the people who are going to be responding on social media or picking up the telephone and speaking to these individuals.
52:12
So it's a really crucial part of your crisis management response plan. Thanks Rachel. I can actually see another question now.
52:23
So that question is, is customer information required if a withdrawal is carried out and stores remove stock or only recalls require customer information notices?
52:36
Well I would say that a withdrawal is not appropriate if product is actually on the shelves and being sold.
52:42
It would be a very unusual set of circumstances if you were doing a withdrawal in that situation.
52:49
The short answer is no, if you're doing a withdrawal, you're not required to keep that level of information, but I would argue why wouldn't you, because it can be part of your lessons learned planning to do that investigation and understand what went wrong, and actually in the event that it was a recall, would you be able to manage the traceability and the record keeping and the documentation that you would need.
53:12
So I would argue that I wouldn't put that distinction between those two types of withdrawal or recall.
53:19
I would employ the same processes to understand where it's gone and what you could get back.
53:27
Thanks, Rachel. I think that is all of the questions.
53:31
So thank you to all our speakers today and thank you for joining and listening to us.
53:36
You'll see our details on the screen there and if you do have any further questions please do please do reach out and we'll be delighted to help. Thanks everybody. Thank you very much.
53:51
Luke I think you're on mute I can see your mouth moving but I can't hear you, don't worry we'll finish it there. Thanks everybody. Thanks everybody. Okay, bye.
