Heightened Government Safety Enforcement Imminent, Warns Sedgwick

The firm's 2021 State of the Nation Recall Index hopes to prepare companies for new regulatory era.

INDIANAPOLIS, Ind. — Companies across all product categories will face increased regulatory enforcement, legal action and reputational damage in 2021 and the post-pandemic world, the Sedgwick Brand Protection 2021 State of the Nation Recall Index warns.
The Recall Index is the premier analysis and perspective on safety regulation and product recall incidents arising across industries. In its 11th year, the Recall Index was published by Stericycle — Expert Solutions. Now, as part of Sedgwick, the Recall Index continues to support risk managers in assessing and resolving crises in the evolving risk landscape.
"2020 was full of risk and great uncertainty for companies across all industries. While a year for the history books is behind us, don't expect everything to change in the blink of an eye," said Chris Harvey, senior vice president of client services at Sedgwick. "That said, we are seeing signs from every regulator that change is coming — and it's coming fast. Enforcement actions will be more frequent, penalties will be harsher and cross-agency collaboration will often be a welcome approach to regulatory oversight."
But companies need to be concerned about more than just the regulatory posture, the Recall Index said. Supply chains are under near-constant threat of disruption during a global pandemic. Consumer demand is evolving. Innovation is creating both important beneficial opportunities, like combatting climate change or fighting disease, and new, little-understood consumer safety risks, including cyberattacks and software failures. At the same time, consumer safety advocates remain active and U.S. lawmakers are increasingly interested in whether regulators are effectively protecting consumers.
"It is well understood that manufacturers bear the brunt of product liability claims and regulatory enforcement. But retailers and supply chain partners are increasingly implicated in product safety matters," said Harvey. "Companies up and down the supply chain need to better manage regulatory, legal and reputational risks before, during and after business and product crises in order to minimize operational impacts and protect ongoing value."
2020 Recall Highlights
While data doesn't tell the whole recall and product safety story, the 2021 State of the Nation Recall Index includes statistics, trends and details about product recall activity from January 2020 through January 2021. A preview of some of the details shared is included below.
  • Despite the far-reaching and long-lasting impact of the global COVID-19 pandemic, consumer product recalls increased 7% year-over-year from 2019 to 2020.
  • Software issues were the top reason for recalls for the 18th time in 19 consecutive quarters and the leading cause of recalls for 2020.
  • Even with minimal inspection and regulatory enforcement activity, 344 pharmaceutical recalls were announced in 2020, representing a 2.4% increase compared to 2019.
  • FDA food recalls continued their downward trend experienced since 2016, while USDA recalls experienced record low activity for the year.
  • Despite the decrease in recall events, automotive recalls still impacted more than 50.3 million units in 2020, just shy of the 50.7 million recalled units in 2019 and significantly higher than the 30 million recalled units in 2018.

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