The Financial Toll of Recalls on Businesses

Large businesses know just how costly recalls can be. Major recalls can cause damage in the millions of dollars if handled poorly, leading financial advisors to dread hearing about company recalls. Typically, things get even worse for the business’s bottom line when the federal government gets involved.

Businesses are always looking to maximize profits. That’s why they’re called businesses, not charities. However, this can often come at the expense of cutting corners in the quality assurance department. Businesses too focused on cutting costs can often find it’s safer to measure twice and cut once, as a major recall can sink a business.

Look no further than Takata, the Japanese airbag manufacturer who was at the center of a years-long debacle over lethal airbag assemblies. Their finances were rapidly depleted as they battle numerous legal challenges and paid out millions in settlements. The company doesn’t even exist anymore, and rightly so: their negligence emptied their coffers, and, worse, got numerous people killed.