A very useful risk mitigation procedure and an essential part of Legal Risk Management (LRM) is product loss control. Product loss control consists of actions and processes that a company implements to both future losses or minimize the negative impact of current ones. Normally it involves the establishment of a Product Loss Control Committee with a formally designed loss control process.Each division of a company should establish a Product Loss Control Claim Defense Committee or develop one in conjunction with the other related groups or divisions within the company. Members serving on the committee should be representative of these departments; for example: R&D, Service, QA, Marketing, Legal, Purchasing, Engineering, and Design. Committee meetings should be scheduled and conducted on a regular basis.
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The main purpose of a Products Loss Control Committee would be to monitor claims activity and identify real or potential problem areas involving loss and implement corrective activity. The Products Loss Control Committee would review and adopt loss control procedures such as establishing guidelines for the development and review of manuals, instructions, labels and warnings, establishment of procedures for the incorporation of appropriate disclaimers into marketing materials, a review of all applicable advertising and marketing materials and the establishment of procedures to standardize packaging, and shipping procedures to insure all information and instruction manuals, labels and warnings are included in the product shipment. These processes would help to minimize product loss.
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Each of these process need to be reviewed by committee members. Other product loss control processes would include:
- hazard failure evaluations
- review of design process
- review of applicable safety standards and regulations
- review of written quality control standards, establishment of process controls, and quality checks
- review of warnings and caution statements should also be conducted
- the warnings and caution statements should be included in the product manual and on the products in the form of labels or tags
The implementation of product loss control throughout a company can be an effective means of not only preventing losses in the future but reducing or minimizing the size of the loss as well. Yet another effective tool a company can use to reduce and minimize risk.