In the first of a two-part feature, Ian Jerrum considers some of the risks faced by food manufacturers
Food manufacturing is now considered a high-risk area of commercial activity, with product recalls such as the Sudan 1 contamination earlier this year launching the food industry into the media spotlight.
The key risk drivers in food manufacturing relate to four main areas: processing, packaging, quality and safety, and supply chain risk.
Processing issues include the environment (for example composite panels which are covered below), plant and machinery, staff, hygiene and delivery timescales.
Most manufactured food products leave the point of production in some form of packaging. Often this will be inflammable, especially when stored in bulk.
A major associated concern is labelling. The Food Labelling Regulations  and subsequent amendments impose wide-ranging requirements on manufacturers.
Comprehensive product information is also an important defence against future litigation, with food allergies of particular concern. Somebody somewhere is allergic to virtually any conceivable ingredient, making clear labelling vitally important.
Likewise, from a process point of view, it is essential to avoid cross-contamination from product to product.
The biggest concern for food manufacturers is quality and safety. Domestic and European legislation imposes far-reaching duties on companies in the sector, and paying insufficient attention to product liability or food safety can quickly put a firm out of business.
A major recall can have a catastrophic effect on the finances and reputation of any food manufacturer without adequate insurance and appropriate contingency plans.
The Food Standards Agency protects public health and consumer interests in nutrition and diet, food labelling and composition as well as implementing the Food Hygiene Regulations , effective from January 2006.
The DTI is currently consulting on a new general product safety directive to be implemented Europe-wide later this year, requiring any serious product safety risks to be reported to the regulator, which may then mandate a product recall.
Potential fines or custodial sentences are also likely for non-compliant company directors. This will further sharpen focus on quality and control systems.
Another major risk relates to the manufacturer's position in the supply chain. Manufacturers need to protect themselves against risks from both above and below.
Retailers - typically supermarket chains - demand increasingly rigorous standards of their suppliers in terms of hygiene, health and safety, equipment, training, reporting on non-compliance, and accreditations.
Conversely, manufacturers are exposed to significant risk from their own suppliers and should make appropriate provisions against disruption to or loss of existing suppliers.
The composite panels commonly used in the internal construction of food manufacturing facilities are a contentious issue.
While they provide an inexpensive means of insulation and have good hygiene and temperature control qualities, many insurers see them as an unacceptable fire hazard.
In reality composite panels with inner insulating cores consisting of foamed glass, glass fibre or mineral wood are far less flammable than other types.
The difficulty facing brokers seeking to find cover for clients is that visual inspection alone can rarely determine the construction type. To satisfy the insurer it may prove necessary to replace all non-approved panels, construct two-hour internal fire walls and/or install sprinkler/drencher fire systems.
When advising on asset risk management, the key considerations are fire, malicious damage (particularly arson), maintenance, general housekeeping, vehicle impact and theft.
Where liability risk management is concerned, public liability and, in particular, products liability are key concerns. The public is increasingly willing to litigate over product contamination, necessitating detailed attention to a range of issues including equipment, training, hygiene, raw ingredients, labelling and provisions for product recall.
The threat of terrorism adds a further dimension, with the World Health Organisation warning of a threat from the introduction of pesticides, viruses or parasites to foodstuffs intended for public consumption.
Of all manufacturing injuries, 25% occur in the food and drink industry. More than 100,000 workers in the industry suffered injuries reportable to the Health and Safety Executive between 1994 and 2003.
Typical injuries include being struck or cut by knives or other hand tools, manual handling and lifting injuries, slips on wet or greasy floors (hence the importance of housekeeping), bumps or falls into cutters, peelers, conveyor belts or other machinery, and exposure to harmful chemicals or other substances.
A broker should be able to advise the client on measures to be taken to prevent injuries such as musculo-skeletal handling injuries, upper limb disorders from repetitive work, noise-induced hearing loss, ill health from working at low temperatures and skin diseases caused by particular food particles or protective clothing such as hygienic gloves.
The Health & Safety at Work Act  and subsequent legislation, including the Management of Health and Safety at Work Regulations [1992/9], require manufacturers to have a written health and safety policy and to carry out risk assessments.
The client company needs to ensure adequate training and instruction and provide appropriate protective clothing and other personal protective equipment.
The company should also be made aware of other legislation that may affect them, including the Data Protection Act , Provision and Use of Work Equipment Regulations  and Noise Regulations. IT
' Ian Jerrum is managing director of Searchlight Solutions. This feature is based on material from Searchlight Solutions' insurance e-learning system Tick
Test yourself on food manufacturing ris
1 What are the four key risk drivers in food manufacturing?
2 Name three risks associated with the manufacturing environment
3 The Food Standards Agency is responsible for the implementation of which major regulations to be introduced in January next year?
4 What percentage of manufacturing injuries occurs in the food and drink industry?
5 Name three types of workplace injury against which food manufacturers should take precautions
Answers: 1 Processing (operations), packaging, quality and safety, and supply chain risk; 2 Any three from: construction, plant and machinery, staff, hygiene and delivery timescales; 3 The Food Hygiene Regulations ; 4 25%; 5 Any three from: musculoskeletal handling injuries, work-related upper limb disorders from repetitive work, noise-induced hearing loss, ill health from working at low temperatures and skin diseases