The recent failure of an electrical company in Queensland has once again highlighted the potential consequences that can result from a product safety issue. The company supplied DC power isolators to solar panels installed on residential houses. The equipment has been linked to 70 electrical fires in Queensland and NSW. The company was forced into a product recall and due to the costs involved with the recall and replacement has now gone into administration. Read more here.
The catastrophic consequence for the business is the type of risk that needs to be adequately identified, assessed and managed. Mitigation would normally involve the purchase of insurance to cover the costs associated with a recall of this type. Many organisations see the cost of product recall insurance as too expensive, but if seen as a catastrophe type protection, for a situation like this, then the amount of premium to be paid becomes inconsequential.