Concentrated risk?

Though I rallied late last yesterday to post to the blog, I’d spent the last couple of days home sick, the victim of some sort of abdominal bug, or, quite possibly, food poisoning.

Having had food poisoning before, this felt pretty much the same–I’ll spare you the details. And the aftermath was similar as well: I was pretty much wiped out for the better part Wednesday and much of Thursday. Wednesday, in fact, the effort of shooting an e-mail to colleagues explaining that I was going to be home sick was enough to send me back to bed for a couple of hours. Later the day was marked by occasionally mustering the strength to read three or four paragraphs of the day’s newspaper, then needing to sleep for an hour or so.

All in all, pretty grim. Thank goodness for baseball on TV and the Master’s coverage yesterday afternoon.

In the midst of all this, though, I did read a few more stories about the recent pet food recall, and heard a story on NPR’s Morning Edition about concentrated manufacturing, the single Canadian factory responsible for many different brands of contaminated pet food being but one example. The trend is by no means exclusive to food processing, obviously, having become commonplace in everything from consumer electronics to automotive components.

The obvious benefit to concentrated manufacturing is the economies of scale that exist in having a single manufacturer producing products in large numbers for a variety of brands. Naturally, there are risks, however, supply chain disruption being one.

And, in the food processing area, the pet food contamination incident shows the potential for food-borne illness on a wide scale. Events like last year’s fresh spinach recall scare show the risk can apply to human products as well, I think.

A story in the Chicago Tribune the other day noted that courts in some states are beginning to allow pet owners to be compensated for their grief over the loss of a pet–historically courts in many states would only allow plaintiffs to sue for animals’ replacement value. Obviously the value attached to a pet’s loss in any claims stemming from this contaminated pet food case would be less than those that might be attached to the loss of a child or other loved one in a similar kind of case. But imagine the potential economic impact that could result from a massive contamination of some widely consumed human food product, not to mention, obviously, the human catastrophe.

I’ve got to think some in the insurance industry are looking at the Menu Foods case with an eye toward what their exposure might be on food processing risks they insure. Better to address the exposure and seek to mitigate any risks before, rather than after, some catastrophic food-borne illness event.

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