Edition #2 - Early Warning Signs of Unmanaged Product Risks

In the last newsletter, we explored how product risks evolve as your business grows. This often leads to new challenges, leaving many business leaders wondering: Why are these problems emerging now when they weren’t an issue before?

Here are some common warning signs:

1. Product recalls or litigation due to incidents, non-compliance, product misuse, or injury.
2. Regulatory scrutiny, such as investigations, cease-and-desist letters, or products stopped at customs.
3. Increased competitive pressure, including aggressive tactics from competitors and negative consumer reports.
4. Rising warranty claims, recurring quality issues, or increasing product rework.
5. Loss of distribution channels due to certification demands or product removals.
6. Product development delays, with new products failing to meet launch timelines.

These aren’t random problems—they’re symptoms of business growth and market expectation evolution. Gaps emerge, risks increase, and without a proactive approach, they can escalate.

For example, as your product footprint grows, so does the probability of product related injury and therefore your exposure to litigation—especially in markets without no-fault personal injury insurance. Consumers may sue for medical costs or lost income. Injuries could also result in the need for product recalls.

An injury could be caused by a product failure, poor design, unanticipated misuse, or sheer probability. For example, if you sell ten pairs of scissors, the chances of someone running with them are low. If you sell 100 pairs, perhaps one person does. At 1,000 pairs, maybe ten people do, but only one falls over. By the time you sell 10,000 pairs, maybe 10 fall-over while running with scissors, and one of the 10 gets injured. I don’t have the exact statistics on running with scissors (although it does appear that cutting with scissors is statistically more hazardous than running with them), but you can see the pattern: the more products in the market, the more likely it is that rare but foreseeable incidents will occur.

The question is: Did you anticipate and mitigate risks in line with market expectations? Consumers understand that some risk comes with a pair of scissors, but their expectations would be different for a cuddly toy, or a safety product like a helmet, for example.

Increased market visibility also brings increased scrutiny:

• Regulators conduct surveillance, and non-compliant products may face recalls or restrictions.
• Competitors may see you as a threat and report compliance issues to authorities.

Even if readily resolved, these issues consume valuable time and resources.

Another challenge is manufacturing and product complexity. As businesses expand, production changes can introduce variations in quality. More complex products also mean higher risks of non-compliance, product failures, and development delays.

If these challenges sound familiar, it’s time to strengthen your product risk management strategy.

For the next few months, we will look at specific risk management strategies related to product development. In the next newsletter, we’ll cover some proven strategies to keep your product development on track and avoid costly timeline blowouts.