Product Recall — Consumer Packaged Goods Manufacturer
A Salmonella outbreak at one of a consumer packaged goods manufacturer’s plants led to a recall of more than 500 SKUs across multiple product lines.
RT Forensic Accountants was engaged to quantify the resulting business interruption loss, which exceeded $120 million.
- Industry
- Consumer packaged goods manufacturing
- Peril
- Salmonella outbreak at a manufacturing facility
- Coverage
- Product recall / business interruption
- Result
- More than 500 SKUs recalled; limits loss agreed with insurers within 10 months
The Loss
The recall reached more than 500 SKUs across multiple product lines. Production stopped at the impacted plant while the company mitigated what it could at sister facilities and co-packing facilities.
The Process
We measured the claim by analyzing historical financials, cost statements, production records, sales records, budgets and forecasts to calculate the but-for impact of the recall. We measured lost production at the impacted plant and reviewed make-up production at co-packer facilities, so that output recovered elsewhere was accounted for and the claim reflected the true net loss.
The Results
A business interruption claim exceeding $120 million was presented to insurers, and a limits loss was agreed within 10 months of RTFA being engaged.