June’s news that Takata, the Japanese car parts manufacturer, had filed for bankruptcy protection was hardly a surprise given the unprecedented scale and cost of the recall of its faulty airbags. Our infographic in this month’s HGI – ‘Some of history’s biggest (and costliest) product recalls’ – reveals that Takata is facing billions of dollars in potential costs, which would make it one of the most expensive product recalls ever.
What most of these recalls illustrate is what the long-term (and often terminal) damage can be to a company’s brand and reputation if it doesn’t handle a recall correctly. Just look at how the restaurant chain Chipotle’s share price has tumbled by over 40% since its first E.coli outbreak in 2015.
It’s why a more proactive approach to product recall could see a potential public relations disaster averted and even turned into a customer relations success. Why shouldn’t companies use a recall not only as an opportunity to demonstrate a commitment to great service – and determination to put a problem right – but also as a chance to communicate with customers and even demonstrate the latest model or product? But, instead, many companies run for cover in the hope the storm will eventually pass. It seems to me that all too often these are missed opportunies.
The use of new, untried technology is likely to result in more recalls in future. Take the Samsung Note 7 recall for example. As more carmakers turn to electric and hybrid models it is likely that this relatively untried technology will result in increased failures, so the manufacturers must find ways to try to turn a recall into a positive and brand affirming experience.
Also in this issue, Paul Lawrence urges the London Market to rekindle some of its former entrepreneurial spirit – as well as bring its costs down to what they were in its glory years – to help it deal with growing challenges. We look at the imminent re-authorisation of the US federal flood programme, which is an opportunity to introduce some of that London innovation into the US flood insurance market.
We also spend 60 seconds with Hiscox London Market’s CFO Craig Knightley and take a saxophone lesson from Head of HR Georgina Roberts, while Bobby Read looks into how much it really costs to produce a bottle of fine wine.
I hope you enjoy the read.