Page 212 - Crisis Communication Practical PR Strategies

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Risk Managers 193
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Camembert cheese contaminated by listeria and
salmonella (March 1999)

25,000 products recalled (or 5,000 according to some
sources).
An immediate drop in sales of 75 per cent.
A 14.5 per cent loss of market share – nine months later, pre-
crisis sales level regained (reaching about 25 per cent of the
market).

Bayer drug recall (Baycol, Staltor and Cholstat) August
2001

Financial consequences – share price fell by 43 per cent.
Consequences on the operating result: a 6.5 per cent decline
in sales figures for the 2002 first quarter and a 46 per cent
drop in operating profit.
Legal consequences: 40,000 patients filed complaints in the
United States, which led to 600 trials. In France, 400 com-
plaints were filed at the end of 2001.

Faced with this sort of situation, the company and its risk manager
must take into account the limits of its insurance coverage. In fact,
today, insurance policies essentially cover four fields:

1. Product recalls.
2. Crisis management costs, that is, reimbursement of those expenses
related to maintaining company market share (communication,
advertising, working to get outlets to continue to distribute the
product).
3. Legal liability.
4. Assets.

Some additional risks are partially covered by a few companies up to
an amount that varies from r2 million to r25 million. These are loss of
brand image (in France, in our experience, there is only one insurance
product on the market, developed by AGF (Allianz group) and Beau
Fixe); loss or decrease in sales figures; and personal liability of man-
agers and social agents. Items not covered by such policies are: