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