Risk & Business Magazine Sterling Insurance Fall 2017 | Page 6

PRODUCT LIABILITY
P
The Best Practices Of
Product Liability
roducts can, and often do, fail.
That’s just a fact of the design
world. What many businesses
do not consider, however, is
what happens to them (and their
bottom line) when that occurs. Worse,
many do not have a process in place to limit
liabilities and deal with issues when they
arise. When it comes to product safety,
time is not on your side. The government
requires quick analysis and reporting for
any product-related incidents, meaning you
need to be on top of it as soon as it occurs.
A good product safety risk management plan
is going to include two key aspects: proactive
risk prevention and reactive risk response.
PRODUCT RISK PREVENTION
Taking proactive steps before any potential
incidents occur can help curb liability and
protect you and your business. There are five
key steps for proactive risk prevention:
5. Processes and Procedures
REACTIVE RISK RESPONSE
Once an issue has arisen, quick response is
necessary:
1. Listen to Your Customers - Customers
will readily tell you about problems with
your product as long as they have a place
to make their issues known within your
organization.
2. Handle Claims Quickly and Properly -
Ensure a streamlined claims process. The
faster claims can be resolved, the more
reasonable damages will usually be.
4. Develop Recall Procedures - Develop
a flow chart of actions, actors, and
deliverables.
5. Understand Your Risk Tolerance -
Understand how much risk you are willing to
take, what potential civil penalties could be,
and how much protection you have in place.
2. Know Your Product - According to the
law, you need to understand and anticipate
product failures due not only to normal use
but also to consumer misuse and abuse. 6. Audit and Practice - Safety processes
should be taught, practiced, and measured.
A core crisis management team should
be put in place and trial runs should be
executed so everyone knows what to do and
when to do it. How quickly can you recover a
product from the field and test it?
4. Controlling Your Supply Chain - Suppliers
should regularly be evaluated and audited
to maintain standards in materials and
supplies.
6
For more information about product liability
and to find out whether your business (and
product) is adequately covered, contact us.
Remember: even the best-designed products
can fail, and you don’t want to be caught
without a plan if they do. +
3. Use Product Safety Committees - Have
a committee in place to regularly evaluate
product issues, and take steps to alleviate
them.
1. Know the Rules - Understand the scope of
the rules which apply to your product, which
agency enforces them, and what that agency
expects from you.
3. Warnings and Instructions - Include
reasonable instructions and warnings for
potential hazards t