Telecom
Product Recall Risks Growing In Size & Number, Technology Drives New Triggers- Allianz
By peter oluka
Defective product risk is an increasing peril for companies, causing significant financial damage, according to a Allianz Global Corporate & Specialty (AGCS) report.
A faulty pedal causes a car to inadvertently accelerate. An outbreak of contaminated peanuts results in a 25% industry-wide reduction in sales. Each of these incidents triggered major product recalls, resulting in billion dollar losses.
Product-related risk is one of the biggest perils facing businesses today, with recall exposures having increased significantly over the past decade, bringing the potential for larger and more complex losses than ever before, warns insurer Allianz Global Corporate & Specialty (AGCS) in a new report.
It highlights the automotive industry as being the most impacted by product recalls, followed by the food and beverage sector, based on analysis of insurance claims.
“Product recalls have risen steadily in the past decade. We are seeing record levels of recall activity in size and cost today,” said Christof Bentele, head of Global Crisis Management at AGCS. “Tougher regulation and harsher penalties, the rise of large multi-national corporations and complex global supply chains, growing consumer awareness, impact of economic pressures in research and development (R&D) and production and even growth of social media are just some of the contributing factors behind this.”
Defective products not only pose a serious safety risk to the public but can also cause significant financial damage to the companies responsible.
Defective product/work-related incidents have caused insured losses in excess of US$2 billion over the past five years, making them the largest generator of liability losses, according to analysis, of insurance industry claims by AGCS.
Recall claims are a major contributor to this total, alongside product liability claims.
The report “Product Recall: Managing The Impact of the New Risk Landscape” analyzes 367 insurance industry product recall claims from 28 countries across 12 industry sectors between 2012 and the first half of 2017.
Overall defective product or work is the major cause of recall claims, followed by product contamination. The average cost of a significant, incident is in excess of US$12 million (€10.5 million), with the costs from the largest events far exceeding this total.
Over 50% of losses arise from 10 incidents. The IT/electronics sector is the third most affected industry after automotive and food and beverage, according to the claims analysis.
Automotive recalls most expensive and large-scale due to “ripple effect”
Automotive recalls account for over 70% of the value of all losses analyzed, which is unsurprising given recent record levels of activity in both the US and Europe.
“We see an increasing number of recalls with higher units in the automotive industry,” said Carsten Krieglstein, regional head of Liability, Central & Eastern Europe, AGCS. “This is driven by factors such as more complex engineering, reduced product testing times, outsourcing of R&D and increasing cost pressures. The technological shift in the automotive industry towards electric and autonomous mobility will create further recall risks.”
One of the largest recalls to hit the auto industry to date, involving defective airbags, is expected to result in some 60 to 70 million units across at least 19 manufacturers being recalled worldwide. Costs have been estimated at close to US$25 billion.
This incident exemplifies the growing “ripple effect” which impacts the automotive sector, but also other industries. Given the use of many common components, a single recall can impact a whole industry.
Food and beverage is the second most impacted sector, accounting for 16% of analyzed losses with the average cost of a significant product recall claim almost US$9.5 million (€8 million). Undeclared allergens (including mislabeling incidents) and pathogens are a major issue, as is contamination from glass, plastic and metal parts.
Malicious tampering and even extortion incidents pose an increasing threat, as well as the growth of “food fraud”, which has become a major issue, resulting in reputational damage and major losses, as seen in the horse meat scandal in Europe four years ago.
The report also notes that products from Asia continue to account for a disproportionate number of recalls in the US and Europe, reflecting the eastwards shift in global supply chains and historically weaker quality controls in some countries.
Yet increasing safety regulation and consumer awareness is ensuring recall activity is also rising across Asia.
Allianz Global Corporate & Specialty Product Recall Risk Cyber
Technology to prevent and drive future recall risks
The report also identifies emerging recall triggers that will drive future risks and claims, largely stemming from new technologies.
Advances in product testing such as genome-sequencing technology will make it easier for regulators and manufacturers to trace contaminated products in future, potentially saving lives, but also potentially spiking litigation activity, as liable parties can be more easily identified.
Cyber recalls may become an increasing reality. Hackers could change or contaminate a product by controlling machinery in automated production plants.
“Cyber is currently an underestimated risk,” said Bentele. “We have already seen recalls due to cyber security vulnerabilities in cars and cameras.” Innovative but untested technologies such as artificial intelligence and nanotechnology could also transform recall risk.
Social media is a fast and effective way of communicating with customers but can also exacerbate recall risk if not well-managed. “Social media is a real game-changer for product recall,” says Stewart Eaton, Head of Product Recall, UK, AGCS. “An erroneous post or tweet can cause reputational damage and directly impact the size of a recall, meaning companies need to react faster than before.”
Recalls for ethical and reputational, rather than safety, reasons are also on the rise, such as in cases where child or slave labor has been used in the supply chain or where food such as halal or vegan has been mislabeled or counterfeited. “There will be incidents when there is no legal requirement to recall but it is the right thing to do. This is a genuine business risk which companies have to be prepared for,” Bentele said.
Pre-event crisis management as part of corporate DNA
Pre-event planning and preparation can have a big impact on the size of a recall and the financial and reputational damage sustained.
As part of a holistic risk management program, specialized product recall insurance can help businesses recover faster by covering the costs of a recall, including business interruption. It also provides access to crisis management services, and consultants, which can test a company’s procedures and offer global support in areas such as regulatory liaison, communications, product traceability and tampering investigations and even genome sequencing and DNA testing to understand a product contamination.
“There is now much more attention on how companies deal with defective or contaminated products, how responsive they are and how resilient their safety systems are. More than ever consumers are also part of the agenda and are driving company behavior by making their choices subject to how companies deal with crises. A company that embraces crisis management, and makes it part of its DNA, is far less likely to suffer a major incidence,” said Bentele.
Vitel Wireless, pioneer Mobile Virtual Network Operator (MVNO) licensed by the Nigerian Communications Commission (NCC), has launched an audacious “data that never expires” campaign designed to address consumer pain points in the market.
Kenneth Nwabueze, Chairman and CEO of Vitel Wireless
Fast-depleting data is a major issue for mobile users, particularly in Nigeria, with numerous complaints against network providers alleging that data plans exhaust prematurely.
But Vitel Wireless said it is now addressing the situation after extensive engagement with Nigerian consumers, particularly young people and small businesses.
Kenneth Neabueze, chairman of Vitel Wireless, said “What we’re saying to Nigerians is this, you buy the data, and you keep the data for as long as you want. There’s no more. You bought 2GB for two days, and it expires. If you buy that data under our scheme, it stays with you forever,” he said.
He added that the model promotes transparency and cost efficiency. “So it’s saving us money, it’s giving us transparency, and it’s giving us the ability to have control over how we spend and use our data,” he stated.
He noted that the concept was inspired by research into the everyday challenges Nigerians face.
“We talked to students who would tell us that in the middle of doing a project, they would be told that the data had expired, and we asked, ‘ How do we innovate?” We have analysed it, and we know, given the current economic conditions in Nigeria, you should buy the data with discounts of almost 40 per cent, and that’s why we are transparent”
The company has also unveiled a suite of products and services aimed at redefining connectivity, including its flagship Vitel Xphone.
The company explained that its services are available via both physical SIMs and eSIMs, with the 0712 number offering global use.
According to the firm, users can retain existing mobile numbers or migrate seamlessly, while enjoying nationwide coverage across all 36 states and the Federal Capital Territory with full GSM services including voice, SMS, USSD, and mobile data.
Chudi Nwabueze, chief operating officer of Vitel Wireless, described the firm as a technology telecom focused on innovation beyond traditional voice and data services.
“We’re coming in with a lot of innovation to activate applications and create tools that people can use in their businesses, homes, and daily lives,” he said.
He added that eSIM technology allows users to operate multiple lines on compatible devices, while introducing a range of digital solutions aimed at enhancing communication, safety, and business operations, anchored by its flagship Xphone.
Hence, the platform combines GSM and VoIP technologies to deliver seamless voice, video, and messaging services, along with cost-saving benefits and nationwide connectivity.
It is complemented by the Oga App, which enables real-time staff monitoring, automated payroll, and performance tracking to improve organisational efficiency.
Similarly, the network also rolled out SecureMe and Asset Tracker to address security and asset management needs.
While SecureMe provides GPS tracking and emergency alerts for personal and workplace safety, Asset Tracker helps businesses monitor and manage physical assets in real time.
Vitel Wireless noted that on pricing, challenged consumers to compare daily data costs across operators, while adding that the network offers discounts for higher volumes without imposing expiry limits.
Also speaking, Chinenye Adebayo, relationship partnership manager, outlined opportunities for Nigerians to join the company’s distribution network by visiting the website and becoming a mobile agent or sun-agents in any state.
The company noted that its offerings, including Close User Group (CUG) services and high-speed wireless network, are designed to provide integrated digital solutions for individuals and enterprises, as it seeks to position itself as a disruptive force in Nigeria’s telecom sector.
MTN Group delivered impressive financial and operational achievements for 2025, boosted by strong performances in MTN Nigeria and MTN Ghana, as well as solid earnings from MTN South Africa.
The three core markets of Africa’s largest mobile provider enhanced profitability, free cash flow, and shareholder dividends by 45%.
IT Web Africa reported that Ralph Mupita, group CEO and president, MTN, highlighted that the telecoms giant’s robust commercial momentum across key markets capped the final year of its Ambition 2025 strategy, while laying the foundation for a new long-term growth phase under Ambition 2030.
“The Group’s overall performance in 2025 was excellent. In the final year of our Ambition 2025 strategy, we were proud to have exceeded the 300 million customers milestone,” he said.
MTN revealed that it now serves more than 307 million voice subscribers, 172 million data users, and 70 million Mobile Money customers across 16 African markets, reflecting the continent’s growing demand for digital connectivity and financial services.
The operator credited its results to disciplined commercial execution and sustained investment in network infrastructure, with R38 billion spent during the year to expand capacity, improve coverage and enhance service quality.
The group reported that data traffic surged 27%, while average monthly data consumption per user climbed to 12.5GB, up from 10.8GB a year earlier, reflecting Africa’s fast-growing appetite for digital services.
Financially, the performance was driven by MTN’s largest markets.
In constant currency terms, MTN Nigeria grew service revenue by 54.9%, while MTN Ghana increased service revenue by 35.9%.
Meanwhile, MTN South Africa recorded 2% growth, demonstrating operational resilience in one of the continent’s most mature and competitive telecom markets.
MTN Group service revenue rose nearly a quarter to R218 billion, while earnings before interest, tax, depreciation and amortisation climbed to R98.5 billion, supported by R3.6 billion in expense efficiencies.
Mupita stressed that the strong results translated into robust free cash flow and improved return generation, allowing the board to declare a dividend of 500 cents per share, up from 345 cents the previous year.
“This comfortably exceeds the minimum dividend of 370 cents we had previously guided,” he said.
The group also announced a R6 billion share buyback programme as part of an enhanced shareholder remuneration framework aimed at delivering stronger long-term returns.
Alongside its results, MTN unveiled Ambition 2030, a strategy centred on three platforms, connectivity, fintech and digital infrastructure, as it seeks to capture the next wave of growth driven by data adoption and financial inclusion across Africa.
“We are hugely excited about Africa’s potential. We are well positioned to leverage our scale, footprint and brand leadership to capture the significant structural growth opportunities identified,” said Mupita.
Source: IT Web Africa
Association of Telephone, Cable TV, and Internet Subscribers of Nigeria (ATCIS) non-profit consumer rights group dedicated to protecting the rights, interests, and welfare of telecommunications subscribers, has urged the Federal Government to ensure safety of telecom consumers’ data hosted by government agencies.
Dr Sina Bilesanmi, president of the body stated this World Consumers Day in Lagos.
He alleged that said subscribers” data are being jeopardised by some of its agencies.
Bilesanmi urged government to ensure that every subscriber in Nigeria can use digital service without fear of physical, financial, or data-related harm.
The ACTIS president said safety in the telecommunication sector extends beyond physical hardware to include data privacy and protection from cyber fraud.
“We call for stricter enforcement by the Standard organization of Nigeria (SON) to eliminate substandard mobile devices and Cable Tv equipment that pose fire or electric hazards.
“We also want safe services from telecoms that are transparent – free from hidden charges and misleading advertisements”, he said.
He urged subscribers to utilize platforms like ACTIS as well as NCC and even FCCPC web portal when they encounter service failures.
He also tasked FG on hosting Nigerian Data Privacy in the country.
He said: “We ask for more robust surveillance and swifter penalties for entities that violate consumer safety standards. We admonish the subscribers to be aware and speak out, a vigilant consumer is a protected consumer.”
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