Aon s Comprehensive Approach to Food Safety and Defense

Transcription

1 Aon s Comprehensive Approach to Food Safety and Defense March 2011 Aon Global Risk Consulting 200 East Randolph Street Chicago, IL Aon Corporation Aon Risk Solutions Global Risk Consulting

2 Aon s Comprehensive Approach to Food Safety and Defense The Food Safety Modernization Act (FSMA) was signed on January 4, 2011, and represents the first major overhaul of the FDA s food safety provisions since The Act does not materially change the food safety and defense risks inherent to agribusiness and food companies, but it highlights the industry s importance and requires risk management activities in the industry. The new law most notably grants the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) regulatory authority to increase the frequency of inspections, to establish mandatory recall authority, to strengthen food import tracing capabilities, and to create open access to records and documentation. Among many FSMA provisions, one of the most critical is Section 103 which requires the owner, operator or agent of each registered facility to conduct a hazard analysis and implement preventive controls plans. The hazard analysis and risk-based preventive controls plan must include the identification and evaluation of all known or reasonably foreseeable hazards to the facility biological, chemical, physical, radiological hazards, natural toxins, pesticides, drug residues, parasites, allergens, or unapproved food additives. In addition, the facility owner, operator or agent must identify and implement preventative controls to assure and prevent any hazardous outbreak, formally monitor such controls, take corrective action when necessary, and maintain records of each. Anchored by a strong industry presence and dedicated Food System, Agribusiness and Beverage group, Aon has an extended and proven track record in helping clients manage food safety and defense risks. We offer end-to-end capabilities from risk assessment and quantification to insurance placements that not only allow our clients to comply with FSMA regulations, but enable them to optimize their risk management program in the face of an increasingly challenging marketplace. An Innovative Approach to Food Safety and Defense Over the past 24 months, as food-related risks and events have received significant publicity and scrutiny, Aon has leveraged industry expertise, risk knowledge, and thought leadership to develop innovative food safety and defense assessment capabilities. The results of our development efforts include the following: A proprietary Food Safety and Defense Assessment (FSDA TM ) tool A unique risk quantification platform developed in partnership with Sandia National Laboratories The unique combination of Aon s innovative tools and expertise provides our clients with customized and unmatched capabilities to meet our clients growing food safety and defense assessment needs. Food Safety and Defense Assessment (FSDA TM ) To address growing needs for industry-specific risk assessments, Aon has developed proprietary Food Safety and Defense Assessment (FSDA TM ) protocols. FSDA is a powerful tool for understanding how a food system business manages its risks and exposures. Aon s approach is predicated on the analysis of a range of food safety and defense management characteristics: including industry risks, product development, quality management, supplier management, contract risk management and the associated interrelationships. Aon Risk Solutions Global Risk Consulting 1

3 The deployment of Aon s FSDA TM solution has been developed to assist clients in meeting specific FSMA s requirements as described through the following outcomes: Diagnosing the maturity of current Food Safety and Food Defense systems and controls, including key benchmarks for Safe Quality Food Initiative (SQFI) certification. Identification of gaps and vulnerabilities in food products hazard analysis and preventive controls at various stages of product development, procurement/sourcing, defense and distribution, as well as contract risk management, allergens management and recalls. Development of action plans to address identified deficiencies in hazard analysis and preventive controls systems. Prioritization of mitigation plans to assist in risk reduction at both local and corporate levels. Reducing potential food-borne illnesses, product contamination and recalls. Providing continuous improvement and sustainable product quality, food safety and food defense management programs. Assisting in the management of Foreign Vendors Verification plans. Food Safety and Defense Risk Quantification Risk quantification takes the risk assessment further by incorporating advanced analytics, allowing for a broad range of food risk scenarios to be quantified. Additionally, it creates a foundation for a capital deployment decision framework in order to measure the potential impact of investments, de-risking the supply system from food safety or defense events. To provide industry-leading capabilities, Aon combined its industry and corporate risk quantification capabilities with the broad-based food system approach taken by Sandia National Laboratories (Sandia) resulting in an unmatched decision framework and food system risk knowledge. The Aon / Sandia risk quantification approach follows a straightforward, four-step process: 1. Supply system topology mapping to understand key concentration points and the interdependencies of the supply system from farm/field to end consumer 2. Risk identification and prioritization that builds on our FSDA TM and ERM (enterprise risk management) capabilities to create an understanding of the most significant and current supply system vulnerabilities as well as current mitigation strategies 3. Stochastic model construction and simulation results to quantify the existing food safety and defense risks in the supply system through thousands of computer-simulated scenarios 4. Mitigation strategy stress testing to compare the benefits of competing mitigation strategies, based on the risk scenarios generated through simulation (step three) The result is a comprehensive tool that enables food industry risk leaders to make better-informed decisions regarding their food safety and defense risk investments. Preparing in the Event Are you prepared to respond when the unexpected happens? The time to prepare for a potential contingency is not during the actual event, but well in advance. Business continuity management plans help ensure a catastrophe-resilient organization, which provide human capital and brand protection, improves supplier and customer relationships, enhancing financial performance in the time of a crisis. Aon Risk Solutions Global Risk Consulting 2

4 The Aon Business Continuity Management team does not directly address food or personnel safety. We do ensure that the emergency management component includes evacuation and personnel accountability, medical management and a formally established reporting protocol and hierarchy to senior management. Crisis and Business Continuity Management Aon s approach focuses on three main preparation and response components: Emergency Management This is one of the traditional components most often addressed in business continuity planning. It involves immediate first-hour reaction to any interruption event including injury, fire, flood, chemical spill and similar events. Any current emergency management/response procedures that exist will be reviewed and incorporated into this process. We will work with your organization to formalize the decision-making framework and capture the management actions necessary to stabilize the situation (e.g., notification, activation, escalation, assessment and management). Note: We do not address the following activities which are normally part of a comprehensive emergency response program: training of the emergency response team and employees; incidentspecific emergency response protocols and procedures development; emergency operations center layout, staffing, equipment, and infrastructure requirement definitions. Crisis Management & Communications This provides the decision-making framework to ensure communication structure and strategy both internal and external are properly executed to protect the organization s brand and reputation during an event. We provide a workshop for key management that outlines their role in leadership, decision-making, communications, and control, focusing on identification of triggers and escalation points, team deployment and event recognition, escalation and plan activation. The workshop does not include training of the recovery communications team and employees in media handling; message substance, timing and development review, including sample messages; target audience information dissemination; spokesperson identification and training; layout, location, staffing and equipment of the crisis command center; detailed media strategy; and communication structure, policies and procedures. Business Restoration & Operational Recovery This component involves longer-term actions designed to bring business operations back to pre-disaster levels as quickly and effectively as possible. Our focus is to restore the functions, applications, systems, and processes rather than individual buildings or facilities, although the two may be intermingled. The actions captured in the plan are based upon a recovery time objective that is developed during collaborative sessions with the departments and steering committee after understanding the department requirements. Aon s Continuity Blueprint, which has been adopted by many clients, is a critical component of crisis communications and business continuity management that helps organizations implement and maintain an effective approach to continuity planning. The Continuity Blueprint methodology reduces deployment and activation time when compared to other planning approaches. This allows users of the plan to implement response and recovery procedures, by department or business unit, following pre-determined timelines. The goal of a crisis communication and business continuity management program is to create a catastropheresilient organization. Aon s planning approach leverages years of hands-on experience serving clients and it Aon Risk Solutions Global Risk Consulting 3

5 aligns with accepted standards, practices and guidelines 1. Aon s process is designed to deliver strong core competencies in the following areas: Program management Risk evaluation, control and remediation Business impact analysis Business continuity strategies Emergency management & response Crisis management & communications Business restoration & operational recovery Plan audits, awareness and training, maintenance and testing Risk Transfer Although risk transfer does not decrease the likelihood of a food safety or food defense event, it can significantly mitigate its financial impact on your organization. Risk transfer, as related to food events, can potentially cover product recall or accidental, or intentional / deliberate (i.e., economically motivated adulteration) or malicious product tampering/adulteration (product contamination) incidents. Aon has a dedicated practice devoted to production recall and contamination and has the market knowledge to construct the best policy for client needs, which may include several first- and third-party options for product contamination: First-Party Covers Recall Expense Repair, Replacement or Refund Business Interruption Brand Rehabilitation Consulting Costs Third-Party Covers Recall Expense Recall Liability - Broad Recall Liability - Named The coverage options that best suit your organization are dependent on many characteristics, such as company and product profile, packaging, QA/QC procedures, product shelf life and use life, geographic distribution, manufacturing locations, and other supply system factors. Risk assessment, risk quantification, and business continuity expertise can also be used to find the most appropriate coverage from a cost benefit perspective. 1 Includes National Fire Protection Association (NFPA) Standard on Disaster / Emergency Management and Business Continuity Programs ; Disaster Recovery Institute International (DRII) - Professional Practices for Business Continuity; National Institute of Standards and Technology (NIST) Special Publication ; ISO 17799; BCI Business Continuity Management Good Practice Guide; FEMA Emergency Management Guide for Business & Industry and the FFIEC Business Continuity Planning guide Aon Risk Solutions Global Risk Consulting 4

6 Combining all of the Ingredients A Comprehensive Risk Management Approach Aon s multi-disciplinary approach examines your food safety and food defense programs from multiple angles, pinpointing vulnerabilities and gaps, identifying potential continuity and risk transfer solutions, and building a framework for investment decisions to protect the firm against accidental and intentional events. This process can assist in establishing a foundation for the new requirements included in the Food Safety and Modernization Act. When all the ingredients are combined, Aon s industry-leading expertise, unparalleled partnerships (Sandia), innovative assessment tools, crisis management experience, and specialized product recall and contamination insurance expertise are unrivaled in the industry. No other risk advisory firm can match the level of service and commitment to clients. For more information, please contact: Food System, Agribusiness and Beverage Group Rick Shanks Practice Leader rick.shanks@aon.com Food Safety & Defense Assessment (FSDA TM ) George Nassif george.nassif@aon.com Food Safety and Defense Risk Quantification Mike Giacobbe mike.giacobbe@aon.com Crisis Management Planning & Preventive Controls Philip Huntley philip.huntley@nyainternational.com Business Continuity Planning Jim Pinzari james.pinzari@aon.com Head of Crisis Management Americas Bernie Steves bernie.steves@aon.com About Aon Aon Corporation (NYSE: AON) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 59,000 colleagues worldwide, Aon delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Aon's industry-leading global resources and technical expertise are delivered locally through more than 500 offices in more than 120 countries. Named the world's best broker by Euromoney magazine's 2008, 2009 and 2010 Insurance Survey, Aon also ranked highest on Business Insurance's listing of the world's largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues in 2008 and Visit for more information. Aon Risk Solutions Global Risk Consulting 5