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Why is risk management essential for business operations?

28 September 2017

Risk management is the ongoing process to identify, analyse, evaluate and treat loss exposures. No matter the industry, it’s crucial to have a robust risk management process that allows for transparent scrutiny of business operations in the event of an unfortunate incident.


Tragic Outbreak

A batch of cheese linked to a fatal E. Coli outbreak in Scotland in 2016 was reported to have tragically caused the death of a three-year-old child from Dunbartonshire with around twenty more people admitted to hospital at the time.

Food Standards Scotland (FSS) found a non-O157 strain of E. Coli in one sample of Errington’s Dynsyre Blue Cheese, which was reported as a ‘serious risk to public health’. Thirteen samples of Dunsyre Blue and Lanark White cheeses from Errington Cheese were also deemed to be contaminated.

As a result, Errington Cheese Ltd, well-known as one of Scotland’s gourmet cheese producers, was issued with a ban on the sale of all of their cheese products and it was reported at the time that the FSS ordered a recall and subsequent destruction of over £260,000 worth of products.

A huge financial and reputational hit for Errington Cheese Ltd.


Errington Cheese Ltd raised concerns with the Council that there had been a mix up in batch testing so contested the ban and accusations levelled at them. These concerns raised doubts with Professor Hugh Pennington, emeritus professor of bacteriology at the University of Aberdeen. Pennington is also known for heading independent inquiries into an E. Coli outbreak in central Scotland in 1996 and a 2005 E. Coli outbreak in Wales. He is frequently cited in British media for his expertise on microbiology and food safety.

Pennington commented publicly that there was “moderately strong” evidence against Errington’s Dunsyre Blue cheese, but “no scientific evidence” on Errington Cheese Ltd's other cheese. He also stated that there was a real possibility that the FSS had ‘over-interpreted scientific evidence’.

In a statement at that time, the Council said that their “clear and primary objective” was to protect public health.

Commenting on the situation, Michael McGlynn, the council’s executive director of community and enterprise, said: Throughout this process, we have sought to carry out that important duty while acting appropriately and proportionately in terms of the food alert for action issued by Food Standards Scotland and the relevant food legislation. We are continuing to do this through today’s actions.”



The council’s action came a week after the cheese producer won a court battle against the sales ban on their products. The interim order granted was designed to force the council to either abandon the case against them or initiate new proceedings under food hygiene regulations.

Leading food correspondent and member of the Committee for the Defence of Artisan Foods, which supported Errington Cheese Ltd, welcomed the action. She said: “We feel very strongly on the committee that it has to go to court and there has to be maximum transparency and scrutiny of Food Standards Scotland’s behaviour in this case so we’re really looking forward to seeing the outcome of that.

FSS acknowledged there was no microbiological link found between Dunsyre Blue and the outbreak of illness.

A positive outcome in some senses but there will have been lasting reputational damage and financial implications that aren’t reported.


Monitor Controls and Resources

It’s essential to monitor risk control and financial resources to mitigate the potential adverse effects of loss. Financial loss can result from several factors such as the financial risk from liability judgements and claims, operational risks from strikes and fire, flood and damage as well as strategic risks of reputation loss and such like.

The more predictable an event, the less risk is involved, therefore it’s imperative that all businesses, no matter what sector they operate in, undertake a full risk management review and put in place the necessary insurances to protect against the cost of risk.


Discover more about the ways Risk Management can benefit your business here.

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