Emerging trends are prompting companies, big and small, to purchase coverage
As the world becomes more complex and marketplaces continue to evolve and interconnect, risk management solutions, including product recall and contamination coverage, have become essential to business survival. Companies of all sizes, not just larger businesses, are feeling the pressure to be proactive about their product risk exposure and therefore, are purchasing policies to supplement their risk management programs.
Push from government and regulators
This growing trend is the result of many factors. One of the most driving influencers is the government and regulators push to modernize oversight and improve overall consumer product and food safety. With these goals in mind, we’ve seen a continuous increase in stricter regulatory standards and new product safety rules that require businesses, even globally, to adhere to more stringent quality control requirements.
A second factor that has also influenced greater government regulations is the world’s ability to share immediate, global communication—raising public awareness faster than ever. A large percentage of the world is now connected to some form of technology, almost 24/7, that provides instantaneous alerts and the ease of spreading news like never before. This complexity, combined with the growing fascination for people of all ages to express and share on social media applications, has proven to challenge brand reputations.
Advances in Technology
Technological advancements are the third factor that helps support the success of government oversight and public safety while also increasing the need for product recall and contamination coverage. Unfortunately, as innovations have brought advanced intelligence and connectivity to increase early detection and solve product discrepancies, new, unintended product safety risks surface. While these new technologies help companies to achieve their first-to-market goals, many experience significant increases in recalls due to issues with software or firmware. The second quarter of 2020 showed this to be the main cause of recalls for medical devices for the 16th consecutive quarter, and it is anticipated there will be an increase in recall activity by the end of the year as various industries are pushed to meet the demands due to COVID 19. A research letter recently published in JAMA internal medicine found that medical devices approved by priority review were twice as likely to be recalled.
Often the speed of technology is rapid—too rapid for regulators to keep up. Drones are a perfect example. The General Data Protection Regulations (GDPR) has a significant impact on their use for capturing data and often laws are constantly changing to keep up with the technology. Any regulatory uncertainty for drones, wearables or other software gadgets could bring upon legal action if the technology is defective, breaks laws or carries inadequate warning labels.
Increased global supply chains
Finally, the expansion of global supply chain use has brought upon challenges to enforce and/or adhere to regulatory requirements. Often companies have little familiarity with suppliers or their location and differing standards can make oversight difficult.
As companies witness these challenging factors and become aware of their own vulnerability, product recall and contamination insurance will continue to be an essential component of a comprehensive risk management plan.
Chris Harvey, “Post-COVID Era of Product Safety: Recall Risks During and After a Pandemic”, MedTech Intelligence, July 15, 2020, https://www.medtechintelligence.com/column/post-covid-era-of-product-safety-recall-risks-during-and-after-a-pandemic/
Farzad Henareh, “Technology recalls surge as regulation can’t keep up with product innovation”, ITProPortal, September 11, 2017, https://www.itproportal.com/features/technology-recalls-surge-as-regulation-cant-keep-up-with-product-innovation/
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