Risk management - Product risks and recall
Mark Tyler considers the steps that should be taken
when considering a recall
Crisis management focusing on the recall issue has
tended to be seen as a discrete topic. However, deciding on recalls
often requires an extensive knowledge of design and manufacturing
criteria and risks normally associated with the products in
question; it always requires a full appreciation of all the
regulatory, contractual and liability issues.
The legal framework
This inevitably varies between organisations. In
highly regulated industries the expectations and powers of the
regulators will be well understood. For less regulated products the
requirements for dealing with risks identified in products are more
opaque, with the substantive safety requirements written in only
very general terms - little more than 'goal-setting'.
Identify regulatory codes
Key issues to be addressed at the outset:
- is one dealing with a consumer product, a product for use at
work, or both? The relevant inspectors and their enforcement powers
will vary. A product subject to consumer protection legislation
(particularly the General Product Safety Regulations 1994) will be
enforced by local authority trading standards officers whilst the
product safety provisions of the Health and Safety at Work Act 1974
are the jurisdiction of the Health and Safety Executive;
- what product specific statutes and regulations (eg for testing,
labelling and any 'bespoke' substantive safety requirements) apply?
Increasingly important are the New Approach Directives, requiring
conformity assessment procedures, technical files, third party
certification (in some cases) and the application of CE marks - all
the documentation will require review.
Identify the product liability risks
Most important is strict liability for defective
products under the Consumer Protection Act 1987. Common law
negligence principles - and most significantly the somewhat
ill-defined duty to warn customers to whom products have been
supplied - will also require consideration. Finally, the express
and implied terms of the contracts with suppliers and customers
will need to be examined.
Assessing the options
In any product crisis there is likely to be a range
of decisions available. The main options can be summed up as:
- do nothing
- tell distributors
- tell regulators
- tell future users: amend product information
- tell current users: issue or revise warnings
- tell media
- restrict product availability
- discontinue sales
- provide retrofit or rectification in the field
At an early stage, before assessing risks, it is
helpful to elaborate on these options and eliminate those which are
irrelevant, not feasible or unacceptable.
In the UK there is no explicit legal recall power
available to the authorities. However, the threat of compulsory
publication of warnings to customers, either through an HSE
Improvement Notice or the Secretary of State's power to issue a
Notice to Warn may effectively mean that a recall is
Certification bodies, especially Notified Bodies
under New Approach Directives may need to be viewed as
quasi-regulators for these purposes. It can be necessary to examine
all the documentation associated with such certifications,
including the terms and conditions of the supply of services and
any protocols which are made a condition of certification.
Certification bodies - as well as having their own reputations to
preserve - are subject to their own quality systems and approvals
and may insist on being informed and consulted about potential
recall or other action.
Attempts to simplify product crises by assessing
simply the proportion of defects and estimating whether this might
be acceptable will rarely, if ever, be successful. Case law
suggests a more sophisticated approach.
In the Australian case of Thompson -v- Johnson &
Johnson ( 3 Med. LR 148) it was said by the trial judge that
"as a general proposition it appears to me to be obvious that where
the possible consequences of the contraction of a condition include
death, even though the risk of any contraction may be very small, a
potential purchaser is, at least, entitled to know of the existence
of that risk and to be able to choose whether or not it will be
accepted". Cases in other areas of law have demonstrated the duty
to warn for various significant injuries, eg a 1:14,000 risk of
blindness (Rogers -v- Whitaker ( 4 Med. LR).
It is therefore necessary to assess carefully the
magnitude of the risk of injury, both in terms of incidence and
severity. Material considerations will be the quality of evidence
implicating the product as a cause of danger, data on past usage,
and the attitude of the regulatory authorities. The Thompson case
showed that regulatory authorities support of the plan of action
adopted by the company and the timing of warnings was regarded by
the Court as significant in demonstrating compliance with the duty
of care. A basic set of risk assessment guidelines is shown
An effective way to review the risk assessment
outcome and the proposed decision about recall, warnings, retrofit
or some other option is, as Mr Justice Ian Kennedy put it at the
recent Law Society Commerce & Industry Group Product Liability and
Crisis Management conference, "to walk around the desk and look at
the matter from the customer's perspective".
The two cases of Walton -v- British Leyland and
Caroll - v- Fearon are instructive about how decisions which are
not in the customer's interests can result in heavy criticism.
- In Walton -v- British Leyland (1978, Product Liability
Casebook) the company was found wholly liable for giving limited
information to only certain dealers and for not recalling Allegro's
with faulty wheel bearings. In the judge's view their duty was to
"make a clean breast of the problem ... they knew the full facts;
they saw to it no-one else did".
- In Caroll -v- Fearon (Court of Appeal, 20.01.98) the Court of
Appeal took a dim view of a tyre manufacturer's reluctance to
publicise failures which had subsequently prompted significant
design changes, holding that there was in this case a duty of full
disclosure to the Department of Transport so that they could
exercise an independent judgment on recall.
Effective handling of product crises requires a
full understanding of the regulatory, contractual and liability
consequences of defects.
On a practical level recall plans - including means of tracing
products through the supply chain, devising notifications and
effectiveness checks - are vital, but are only one part of an
adequate strategy. Risk assessment techniques are of prime
importance in making decisions affecting liability.
Legal obligations for safety impinge on every stage of a product's
life from design to disposal. Recall planning belongs in a wider
framework of effective risk management.