This document summarizes an issue of a magazine focused on risks and insurance issues for the food and drink industry. It discusses how Morrisons supermarket has worked with Aon to improve its business continuity planning across its 25 manufacturing, processing, and distribution sites in the UK. It also discusses proposed changes to EU food safety guidelines and whether these could encourage innovation from food companies while still protecting consumers. Additionally, it examines how food and drink companies can better account for weather impacts on sales through historical data analysis rather than simply blaming poor weather.

1. Aon Business Unit
Market or Division | Practice Group
Risk. Reinsurance. Human Resources.Risk. Reinsurance. Human Resources.
Food and Drink
Inperspective
In this issue
Welcome to this latest issue of Inperspective, Aon’s review of the
risk and insurance issues facing food and drink organisations.
It’s our belief here at Aon that food safety and the impact it can have on business
continuity, will be two of the major forces driving operational strategy in the food and
drink industry next year. With this topic in mind, I’m delighted to say that we are able
to present a unique insight from one of the UK’s best known grocery brands.
Wm Morrisons has worked with Aon since 2013, and Jonathan Burke who heads
its Competition and Compliance function, has been kind enough to reveal the
ways we have been providing business continuity support so it can keep its
shelves stocked.
For a business with no less than 25 of its own manufacturing, processing and
distribution hubs the need to create a dynamic continuity planning framework is
abundantly clear and Jonathan provides some frank revelations about how planning
now feeds into the business from every direction.
p3 How Morrisons put continuity
planning in its own hands
p5 Will new food safety guidelines
support the industry and
protect consumers?
p7 Can food and drink still blame
the weather?
p9 Meet the experts
Aon Risk Solutions
National | Food & Drink Practice
Issue 5 Winter 2015
Norman Andrew
Executive Director, Aon
Business continuity and
food safety will be dominant
themes in 2016

2. Inperspective | Food and Drink | Winter 2015 FPNAT.175 2
Will new safety guidelines support the industry and
protect consumers?
Also in this issue, my colleague Kary Yates, looks at the proposed review of food
safety guidelines which many of you will no doubt be aware. Kary explains the
importance of demonstrating a robust approach to safety and reminds
manufacturers that a less prescriptive regime could have some benefits if it
encourages firms to innovate their testing procedures.
Can food and drink still blame the weather?
Meanwhile, home nations rugby fans may still be licking their wounds but our
experts in Aon Benfield suggest this isn’t the only contingency manufacturers
should have been concerned about. Kurt Cripps reveals how food and drink is able
to use historical data to understand the effect weather patterns have had on sales
and are finally able to do something about it.
Download our food safety white paper
And finally, a question: How do blackcurrants fit in with the product recall plan at
cider maker Thatchers? If you don’t know the answer to this, download our latest
food safety white paper.
As ever, we hope you enjoy this edition and look forward to hearing your
thoughts...
aon.co.uk/food-drink

3. Inperspective | Food and Drink | Winter 2015 FPNAT.175 3
How Morrisons put continuity planning
in its own hands
Vertical integration is at the heart of Wm Morrisons’ strategy. Its
nationwide manufacturing, processing and logistics operation
ensures the supermarket’s shelves remain stocked to perfectly
reflect customer tastes for those essentials in our weekly
shop. Inperspective spoke with the supermarket’s Head of
Competition and Compliance, Jonathan Burke, to find out how
business continuity planning (BCP) has become a key element to
maintaining this objective.
In July 2013, Wm Morrisons PLC announced that it had purchased the mothballed
Del Monte banana ripening plant in Boston Lincolnshire1
. The development not
only created 80 new jobs but exemplified the company’s approach to delivering
products as consumers want them.
Around the same time, Morrisons and Aon began a partnership to ensure this
factory and the two dozen others like it including factories for vegetable processing;
cheese cutting, meat and fish processing, abattoirs, bakeries and even fresh cut
flower arranging, are all following the same rigorous approach to business
continuity planning.
“We have a very high level of vertical integration at Morrisons and we’ve been
refining our approach to BCP for a number of years,” says Jonathan. “When we
began working with Aon, we were looking for a more sophisticated approach to
BCP which placed the ‘plan ownership’ in the hands of our site management as
well as my department at head office. The typical prescriptive methods were no
longer appropriate on their own and while checklists and emergency procedures
remain important, the approach we were looking for was much more dynamic.”
Hugh Leighton, Senior Consultant within Aon’s Business Continuity Practice, has
been responsible for delivering a series of desktop exercises, training sessions and
scenario planning drills at Morrisons’ distribution centres and production sites
around the UK.
The exercises are part of an annual review process which Aon supports at each
of Morrisons’ 25 operational sites across the UK. He explains: “We keep in mind
at all times the strategic objective of the client and as Jonathan explained, there
was a need to build into Morrisons’ BCP testing and review process a more
scenario-driven approach. We have been able to provide them with a simple
approach to desktop exercising, which tests both the plan and the team,
providing valuable training and experience, and identifying areas for improvement.”
Hugh Leighton
Senior Consultant
Aon Global Risk Consulting
1
Source: The Grocer 26th
July 2013
aon.co.uk/food-drink

4. Inperspective | Food and Drink | Winter 2015 FPNAT.175 4
Unique risks on each site
Jonathan adds that the exercise and debrief elements introduced by Aon have been
the most valuable of all. “The team at Aon will devise a dynamic scenario like a
catastrophic electricity failure and site management will deploy their existing BCP
plans to test how well put together they are. While this is a generic incident, it will
affect each site in a different way; the abattoirs for example emerged from their
session having learned that they will need to include provision for veterinary
assessment under animal welfare regulations. If this wasn’t included in the plan,
this requirement would undoubtedly introduce further business continuity risk.”
Jonathan says it is examples like this which show how Morrisons’ teams have
become part of the BCP planning process. “This is a universal lesson for any
business. They are the ones with intimate knowledge of their own operation so it
makes sense to bring their experience on board. Aon’s Business Continuity desktop
exercise has taught us how to engage colleagues into the process and draw on
their insight to create a more dynamic and robust BCP plan for our company.”
For further information on Business Continuity Planning please contact
Hugh Leighton.
Hugh Leighton
+44 (0)20 7086 7312
hugh.leighton@aon.co.uk
aon.co.uk/food-drink

5. Inperspective | Food and Drink | Winter 2015 FPNAT.175 5
2
Source: Food Safety Magazine
3
Source: FSA releases new data on campylobacter
in chickens – Food Safety Magazine
Kary Yates
Team Leader, Product Recall and Contamination
Will new food safety guidelines support
the industry and protect consumers?
Food manufacturing has faced huge challenges in recent years
as demands for greater transparency in the supply chain have
co-incided with negative headlines. Kary Yates, Team Leader,
Product Recall and Crisis Management at Aon reviews the latest
proposals for new safety guidelines and asks if they will encourage
greater innovation…
In spite of the fact that the vast majority of Food Standards Agency enforcement notices
result in little or no harm to consumers, the truth is that a food safety incident can cause
material harm to manufacturers and their brands.
In the worst case scenario it can interrupt production to such an extent that a business’
long-term viability is in question.
Now, with the remnants of Horsegate and the subsequent Elliott Review still fresh in the
mind, a European Commission proposal to review food safety guidelines has re-ignited
the debate about whether new industry standards are needed, while some commentators
have suggested they should extend beyond manufacturing alone2
.
In September 2015 the European Commission announced that it was proposing a review
of HACCP (Hazard Analysis and Critical Control Points) and The Food Standards Agency
(FSA) is currently consulting with stakeholders on the review to the existing EU HACCP
guidance documents.
Using supply chain traceability control standards developed by the Pillsbury Company
in the 1960s for the NASA space programme, HACCP has for decades been a source of
pride for the food manufacturing industry. Using a global framework and a consistent
language, the protocol concentrates on the most significant hazards facing the food
industry, including microbiological contaminants like Salmonella, E.Coli O157:H7, Listeria,
Campylobacter, and Clostridium botulinum.
However, despite HACCP’s robust reputation, contamination issues continue to
generate headlines and the FSA consultation is asking whether the current guidance is
straightforward enough. Concerns have been expressed about whether prerequisite
programmes (PRPs), which, alongside HACCP, provide the conditions essential for safe
food production, are sufficient on their own.
The FSA also wants to know whether particular parts of HACCP and PRPs represent a
disproportionate burden on food and drink businesses and has asked stakeholders how
this might be reduced without compromising food safety.
The challenges faced by poultry producers and UK supermarkets during 2015 as
campylobacter contamination made headline news have again put the issue into sharp
focus. The FSA said in a recent report3
that although only 6.8 percent of chicken packaging
had traces of contamination on the exterior, it was still concerned because consumers
didn’t expect this. The regulator pointed out that there are no specific rules regarding how
to handle such packaging from the point of sale to opening it at home.
aon.co.uk/food-drink

6. Inperspective | Food and Drink | Winter 2015 FPNAT.175 6
Download Aon’s food and drink safety report
As I said in my opening remarks, the possible consequences of a contamination incident
can be severe and as insurance and risk consultants we have to encourage a robust and
transparent regime of testing, control and monitoring along the entire supply chain.
However, we do not necessarily advocate a prescriptive system and should HACCP be
made more adaptable to suit the needs of modern manufacturing, supply and distribution
then the industry could be encouraged to innovate.
Some have suggested that a more flexible regime may demotivate companies from focus-
ing on safety, but I would disagree. Consumers and the press stand as judge and jury on
a manufacturer if they fail to take contamination and safety seriously and this should be
motivation enough. It has already become clear that the enforced testing regime recom-
mended by the Elliott Review will not be supported by government, and as such manufac-
turers have an opportunity to design and implement more appropriate tests that properly
reflect the risks within their own business.
For further information on Product Recall and Contamination contact
Kary Yates.
Kary Yates
+44 (0)20 7086 4411
kary.yates@aon.co.uk
aon.co.uk/food-drink

7. Inperspective | Food and Drink | Winter 2015 FPNAT.175 7
Can food and drink still blame
the weather?
With the Rugby World Cup recently coming to a close, some food
manufacturers may realise the home nations’ performance isn’t the
only variable they should have planned for. Kurt Cripps, Managing
Director at Aon Benfield explains how the industry should also
hedge its position for a range of possible climatic scenarios.
For food and drink businesses, the weather is a volatile external factor influencing
consumer behaviour and market dynamics. The weather can quite literally make or
break a company’s year.
2015 has been a disappointment for many manufacturers who rely on the summer
months to deliver their peak demand as the temperature rises. The Met Office said
summer 2015 was cooler and wetter than either of the two previous summers, with
a provisional mean temperature 0.4C below the 1981-2010 average. Conversely,
rainfall was above average, with 113% of the average falling on UK shores during
the summer months.
But while food and drink businesses will expect wet and cold weather during
autumn and winter, what if seasonal averages upon which their forward planning is
based no longer apply? How much of that financial impact can be absorbed?
Some manufacturers smooth their exposure to volatility in commodity prices of raw
materials like wheat, rice, coffee and other staples with weather derivatives which
reduce the risk associated with adverse or unexpected conditions, paying out if
they force prices beyond a pre-defined tolerance or impact a key trading season.
But derivatives aren’t a simple product to buy and so their penetration is limited;
meanwhile the industry is still guilty of blaming the weather. A scan of investor
relations pages often reveals how it remains high on the list of problems at which to
point the finger of blame. 2015 has been no exception, with an inclement summer
unfortunately hitting the bottom line for some as sales, and profits, both fell.
If you look back far enough, the resignation by manufacturers over how weather
impacts their business is categorical, and in most cases made without any recourse to a
solution. The default position is to hope that this year things will work in your favour.
Unfortunately, investors appear increasingly to label this tactic in rather unflattering
terms. ‘Earnings excuses’ was the subject of a recent article in Fortune Magazine
titled ‘the weather ate my returns’, which cited a 2014 study by Emory University
researcher Dexin Zhou, titled ‘The Blame Game,’ which found that “the more
corporate executives blamed poor performance on external factors, the less their
stocks returned in the future4
”.
The question is one of tolerance. How much bad weather is too much? Every
organisation has a risk appetite but with modern approaches to data mining and
analytics it has now become possible for companies to identify and isolate a trading
loss as an insurable interest and hedge against that loss without resorting to
complex derivatives.
Kurt Cripps
Managing Director
Aon Benfield
4
Source: http://fortune.com/2015/04/24/
the-weather-ate-my-returns/
aon.co.uk/food-drink

8. Inperspective | Food and Drink | Winter 2015 FPNAT.175 8
Historical climate analysis can be overlaid against trading data to produce a ‘real
time’ review of how and why the weather influenced your company’s sales over
time. For companies that habitually look to the skies for a reason why consumers
open their wallets, this can be a very powerful tool, not only when sales drop but
also when demand surges beyond expectations.
The UK has recently been enjoying just such a scenario with the Rugby World Cup
coming to a close on 31st October. The fate of numerous food and drink brands has
been riding on the success of the competition with beer and tied promotions in
every retail outlet.
Indeed, the performance of the home nations’ teams can and does have an
influence on sales, leading many manufacturers to build ‘what if?’ scenarios into
their production planning. But when pub gardens across the country are washed
out from an unseasonal deluge it stands to reason that winning on the field should
not be the only variable a manufacturer should plan for.
For further information on Aon’s weather solutions contact Kurt Cripps:
Kurt Cripps
+44 (0) 20 7522 3718
kurt.cripps@aonbenfield.com
“If you look back far enough, resignation over
how weather impacts business is categorical…
The default position is to hope that this year
things will work in your favour”
aon.co.uk/food-drink

9. Inperspective | Food and Drink | Winter 2015 FPNAT.175 9
Kurt Cripps
Managing Director
Aon Benfield
Hugh Leighton
Senior Consultant
Aon Global Risk Consulting
Kurt Cripps Kurt Cripps is a member of the treaty team within Aon Benfield and
product leads the Aon weather reinsurance offering WExcess. This is the only UK
regulated offering of its kind. Kurt started his career at HSBC Insurance Brokers in
2004 and joined Aon Benfield in September 2009. He has experience in casualty
lines across many international territories. Prior to joining the UK&I team in July
2009, Kurt spent 5 years in London placing APAC treaty business. Kurt is a member
of the Weather Risk Management Association.
Involvement in placement of non-traditional and non-subscription placements
within the International Reinsurance markets and extensive participation with the
Aon and RMS teams in respect of catastrophe modelling.
Hugh Leighton works within the Enterprise Risk Management team within Aon and
is responsible for the development of focussed risk and business continuity
management programmes and the custom design of specific solutions to deal with
client issues. Hugh has extensive knowledge and expertise within the Business
Continuity field, designing, implementing and supporting BCM projects for a range
of clients and has specific expertise in working with manufacturing clients in the
food and drink sector.
Hugh is a member of the British Standards Institute committee BCM1, which is
responsible for creating and maintaining BS 25999 and ISO 22301 (Business
Continuity Management Standards). He also participated in the committee which
prepared the recently published American National Standards Institute (ANSI)
standard for BCM systems and is a qualified Lead Auditor for BS 25999.
Meet the experts
aon.co.uk/food-drink
Kary Yates
Team Leader,
Product Recall and Contamination
Kary Yates has 29 years’ experience in producing and placing property and
casualty business with emphasis on product recall and contamination since 2002.
Kary has 14 years broking experience in the London market, including Lloyd’s of
London and the London company market. Kary has a number of qualifications in
food and drink including a Level 2 and 3 in Food Safety Supervision for
Manufacturing.

10. Risk. Reinsurance. Human Resources.
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