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Risk Taking – Consequences And Missed Opportunities

by Andrew Thomson on June 27, 2017

Risk taking by many food business owners and managers is prevalent throughout the broader Australian food industry as they are failing to comply with food law requirements. It seems every week there is a report of a food business being fined or issued with an infringement notice for failure to comply. Data from food prosecution registers and media reports across Australia supports this view.

So, what are the risks and consequences?

As a former food regulator and consultant, I am observing:

  • many food business owners and managers have not updated their knowledge and understanding of food law and their business obligations (including at board of director level).
  • inadequate monitoring and reporting of performance.
  • operational risks associated with employee training, implementation, monitoring and reviewing of food safety systems and correct task management in all aspects of food handling.
  • a lack of understanding and inadequate cleaning and sanitising practices of equipment and surfaces.
  • small to medium sized food manufacturers and processors are deficient in food safety systems and procedures for recalling unsafe food and other documented business processes.

Steve White from global insurance brokerage and risk management firm, Arthur J Gallagher (Australia), says the best way to protect your customers – and to avoid costly lawsuits, penalties and damage to reputation and business interruption – is to know your obligations, maintain food safety standards and have the right insurance.

Enza Pacetta also from Arthur J Gallagher adds, if you become involved in a food safety-related incident (like a salmonella outbreak) a management liability policy would cover your investigation costs. It would also cover your defence costs related to claims of selling unsafe food. The penalties for selling unsafe food can run into hundreds and thousands of dollars.

Incidents arising from fraudulent, dishonest or wilful conduct may not be covered by your insurance policy. In some cases, food businesses need public and product liability insurance to cover the cost of any potential mass lawsuits. For most locally-owned small businesses, this could mean the difference between staying afloat and going bust.

The way forward 

Besides the risks associated within no compliance of food safety, a food business cannot innovate and become a market leader without first being in compliance with food law requirements.

Food business owners and managers engaging in risk taking miss the opportunity to recognise the many business benefits.

  • Cost reduction can be made by having a good food safety system, this should assist in preventing errors and reduces the need to repeat or re-work product or tasks.
  • A business culture with a strong focus on compliance (and moving beyond minimum standards) can contribute to operational efficiency. Food handling employees can take greater ownership of compliance and this rubs off on everyone within the food business.
  • Suppliers, customers and clients value working with a food business committed to achieving high standards of food safety. This builds trust and brand loyalty.

What else can I do?

  • Have an understanding of food safety and business risks. This enables you to view strategic, operational and other risks and to apply appropriate risk management strategies. It also identifies potential opportunities and assists with decision making and adding value
  • Your food business will have a competitive advantage and can actively seek out new business opportunities.

A final note

  • There will be a reduced number of inspections (and fees) by food regulators and you will not attract the attention of the media.

The effect of not complying with food law will impact on the ability of a food business to continue operating. Be proactive. Protect your food business. Make a clean sweep and discover the opportunities – you won’t regret it.

Related articles:

Leading The Way In Business Excellence

Standard Operating Procedures – The Business Benefits

Food Safety Training Must Be Top Priority For Restaurateurs

 Think ST Solutions is grateful for the contribution of Arthur J Gallagher to this article 

Think ST Solutions offers you practical solutions at a management level and to your staff whether you operate in hospitals, aged care facilities, restaurants, hotels or the food industry generally. We specialise in developing useful tools to assist you in the areas of food safety, strategic planning, business management, risk and compliance training and easy to implement business consultancy solutions.