American insurer AIG has launched a new tool to measure the financial impact and frequency of product recalls for food and beverage businesses in Australia.
Called Novi, the web-based service was set up to estimate a company’s probable maximum recall loss in the event of an accidental contamination, the insurer said.
The estimation process uses more than 80 data points and a proprietary methodology based on AIG’s contaminated product insurance, extensive analysis of thousands of global recall incidents, and input from food safety consultant NSF International.
“Novi helps food and beverage manufacturers understand their exposure to a recall event, and make more informed decisions about how to manage their risk,” said Nicky Alexandru, AIG’s vice-president for crisis management.
“While most companies are generally aware of the frequency of product recalls, they are unsure of the potential magnitude of the cost of a recall event.”
The service is free and available online to food and beverages manufacturers in Australia.
“There are on average five product recalls reported every month in the food and beverage industry in Australasia, with two to three incidents occurring in Australia alone,” said AIG Australia’s Claire Richards.
“Maintaining food safety standards and managing recall risk are two pressing issues for Australian companies and, through Novi, we can now assist companies in quantifying a potential threat to their business so that they can manage their risk more effectively.
“Expenses from a product contamination recall event can mount quickly. These can include replacement and destruction costs, lost profit from plant shutdowns, government intervention, loss of profits and brand and reputational damage.”