Product Recall – A Primer: Contamination Perils

This is the continuation of a four-part series. You can read the article that precedes this one here.

Contamination perils

It’s helpful to understand the three basic contamination perils when designing a risk management program that provides the best protection for the least cost.

• Malicious tampering (intentional contamination) is prone to publicity, so it may seem common. In reality, malicious tampering is rare, but when it strikes it tends to be a very severe loss. Managing this risk exposure can be difficult as motives vary widely.
   
• Accidental contamination is an unintentional error in the manufacturing, packaging or storage of a product. This includes mislabeling of ingredients, contamination by a foreign object or chemical, etc.  This peril is the most common, but the majority of incidents are typically discovered prior to shipment. Therefore, these events receive very little publicity. The opposite of malicious tampering, this peril has very high frequency but relatively low severity. While most accidental contaminations are small events, historically the largest losses have been due to accidental contaminations.
   
• Product extortion is the most difficult peril to characterize. Its frequency is between that of malicious tampering and accidental contamination. Its severity, however, is more difficult to quantify. Most extortions are amateurish hoaxes, but may evolve into outright tampering cases, which can be very costly.