What Airbags Can Teach Us About Risk Management

Recently , the New York Times reported several fatalities and numerous injuries linked to defective airbags manufactured by a company named Takata.  The defective design or nature of the airbag revolves around defective propellant in the airbag and has resulted in a massive recall involving millions of cars.  According to documents reviewed by Reuters, not only did Takata know about the airbag problems in 2004 ( which it did not report to federal regulators) but its management instructed the engineers researching the problem to destroy all data and evidence regarding the investigation.

Not only is this turning into a media nightmare for Takata , but what is coming to light is a complete failure of risk management processes especially those involving manufacturing and safety protocols.  Namely,  Takata switched propellant chemicals in the airbags. The new propellant caused the metal airbag  to burst open due to excessive air pressure caused by high humidity.  It also was discovered that Takata’s manufacturing plant in Mexico allowed a defect rate eight times above acceptable limits. Takata’s problems could have been avoided had it followed appropriate risk management processes and procedures.  Lives could have been saved.  And injuries could have been prevented.  What does Takata’s problems with air bags have to do with risk management- well everything.  Its all about the planning!  Its all about the implementation of a properly designed and thought out Legal Risk Management Program.

When manufacturing products, especially those that could cause injuries, it all goes back to product planning.   I recommend using checklists to help in the product planning and designing process.  When designing products, manufacturing companies need to be very detailed to avoid product liability litigation, especially in the United States. Product planning is a very detailed process involving many departments.  As part of an overall plan to reduce risks of product liability litigation as well as class actions and government investigations raised by CPSC or FTC concerns, it is recommended manufacturing companies develop a detailed design risk program or “DRP.” Such processes can minimize, reduce, or prevent liability when claims are brought as a properly designed  DRP will minimize product failure as well as alert all concerned as to the major issues of product and design defects before such defects happen.

I recommend  the use of a checklist cover such  DRP matters. Checklists are a handy tool to use when looking at processes and procedures to minimize legal liability, especially in the product planning and design phases of product development. Product planning and design process considerations should normally include the following:

Product Design Issues and Considerations 

  • Written procedures for the design program, including:
    • Design choices—consideration of alternative designs
    • Specifications—definition of specifications used in designing the product
    • Establishment of a design review committee
    • Establishment of written procedures for the development of specifications, which verify that specifications are accurately reflected in the designs.
    • Establishment of procedures for construction and testing and prototypes.
    • During the design: Evaluation and consideration of:
      • Determine types of people likely to be exposed to the product, consider unique risks to these groups
      • Tailor labeling and develop safety features to address the unique risks to the intended users
      • Risks of intended use—test and evaluate to determine what risks are presented if the product is used as intended; reduce these risks through design changes, safety features, and/or labeling.
      • Assess the likelihood that products will be misused; identify and reduce through design features, safety features, and/or labeling.
      • Malfunction: Incorporate features that prevent critical failure or malfunction. Is it safe to use? If not, what features can render it safe?
      • Design manufacturing considerations: Can the product be manufactured in accordance with the specifications?
      • Serviceability: Are the products so difficult to service or maintain correctly?
      • Consider the materials, components, equipment, and software that should be used in manufacturing the device.
      • Assure that designs comply with applicable code certifications and standards. Are they appropriate? Do they comply with governmental and industry standards?
      • If using an outside company to develop or provide product designs, review and evaluate the designs.
      • Monitoring of designs, including continued research and testing and review of new information respecting the products.
      • Record-keeping of all product designs and processes to show all the above processes were considered.
      • Is everyone in the design department familiar with all design procedures and processes?

If Takata had followed the processes outlined above, it could have easily discovered the potential danger caused by the new propellant.  It could have put in place a system which monitored and tested all aspects of its manufacturing processes. If it created a checklist covering all issues reflected above, there probably would not have been any issues.

Does your company have detailed design and manufacturing processes in place?  Do you have a handy checklist to use as a tool when designing and manufacturing product? Remember, use of a checklist can help a detailed design risk program. When designing and manufacturing product- its all about risk.  Implement a DRP today and put in place a handy checklist!

2 Comments

  • It’s always best to avoid the problem by managing the risk in the first place. That’s something that should be accomplished with internal controls. Regrettably, many companies don’t.

    That’s bad news for the companies — and good news for Crisis PR firms whose job is to clean up the messes they create.

    Roger Gillott, President
    Gillott Communications LLC
    [email protected]

    Roger Gillott November 24, 2014
    • I agree, which is why I wrote the post. I am always amazed at the lack of internal controls escpecially as it concerns product planning, design, manufacturing
      processes.

      Bryan Hopkins December 2, 2014

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