The food and beverage industry is one of the largest and most critical sectors of the global economy. In the U.S. alone, agriculture, food, and related industries contributed approximately USD$1.537 trillion to gross domestic product (GDP) in 2023, while the EU food and beverage sector generated €1.44 trillion in turnover in 2022 and employed 4.7 million people.^1,2 Given the scale of the industry and its importance to public health, food safety failures can have significant consequences for consumers, businesses, and investors alike.

Publicly held companies are governed by boards of directors responsible for overseeing risk and protecting long-term shareholder value. The board approves major strategic decisions, oversees risk, holds the CEO accountable, and ensures that the company remains aligned with the goal of maximizing long-term value. While food company boards often include expertise in areas such as finance, strategy, reputation management, and consumer trends, it is relatively uncommon for directors to possess deep food safety expertise. This is noteworthy because food safety remains one of the most significant risks facing food businesses, with the potential to affect consumers, disrupt operations, damage brands, trigger regulatory action, and erode shareholder value.

There have been a number of publications on the cost of food recalls to businesses.³ Avoiding the negative consequences associated with a recall is certainly a major factor that drives the inclusion of this topic to board-level discussions. Large, public recalls have a negative impact on consumer confidence, which can lead to reputational and brand damage and loss of market share. These losses can result in reduced cash flow, impact to net revenue and profit, and reduced ability to invest, from which is often difficult to recover. Seo et al.⁴ demonstrated that the negative effects of a food safety incident on company stock price can last up to a year. Negative social media reports can also increase the impact, as the widespread dissemination of information can be difficult to manage.

Food safety remains a critical business risk that demands sustained board oversight. A recent article in Food Safety Magazine listed the ten common risks in the food and beverage industry.⁵ Risk number one was "food safety," with risk number two listed as "product quality and recall." Given greater consumer sensitivity and increasing regulatory vigilance, as well as increased media scrutiny, this should come as no surprise. With an expanding range of serious risks placing increasing pressure on boards and their resources, maintaining focus on food safety is essential. In the article, risks number three and eight were listed as "supply chain" and "operational risks." These relate to increasingly complex supply chains and the need to avoid supply chain disruption while improving operational efficiency. A food safety incident is likely to result in disruptions to operations and the supply chain, reinforcing its spot as the top risk.

The scale of the public health burden further illustrates why food safety must be treated as a strategic governance issue. In data reporting, acute disease receives the most focus because it is easier to link an acute contamination source to the disease. The World Health Organization's recently updated foodborne illness burden data⁶ reveals that as many as 866 million people around the world fell ill in 2021 after consuming contaminated food. Of these, 1.52 million people died, with a disproportionate burden of illness and death falling on children under the age of 5 years. Diarrheal diseases are responsible for more than half of the global burden of foodborne disease.

Case Example: E. coli in Fenugreek Sprouts, Germany, 2011

The impact of food safety incidents can be difficult to contain and can spread to other operators in a sector, industry, or even an entire country. An example is an E. coli outbreak from May–July 2011 tied to fenugreek sprouts grown in Germany. The outbreak resulted in 3,950 confirmed infections and 53 deaths.^7,8

Initially, German authorities incorrectly identified Spanish cucumbers and tomatoes as the likely source of the outbreak. The misattribution reportedly cost Spain approximately USD$200 million in lost exports, while cucumber sales declined across markets regardless of country of origin. The situation also heightened political tensions within the EU. Investigators later determined that the outbreak originated from fenugreek sprouts grown in Germany (Figure 1).^7,8

The incident is estimated to have resulted in USD$2.8 billion in human costs, including medical expenses and lost productivity due to illness. Consumer confidence in fresh produce was significantly undermined, triggering widespread economic repercussions across Europe. Growers and producers reportedly lost approximately USD$330 million per week as demand fell, and the effects were felt throughout the entire fresh produce supply chain.^7,8

While most foodborne disease is short-term and microbiological in origin, causing symptoms such as nausea, vomiting, and diarrhea, it can also lead to longer-term illnesses such as cancer, kidney or liver failure, and brain and neural disorders. Foodborne diseases may be more serious in children, pregnant women, and those who are older or have a weakened immune system. As scientific understanding advances, it has become increasingly clear that acute illness represents only part of the burden associated with foodborne disease. Equally important are the long-term health consequences, many of which remain poorly understood and difficult to quantify. At the same time, foodborne illness is becoming increasingly complex and will continue to evolve as food safety systems contend with emerging challenges, including food allergens, chronic health effects, and the needs of an aging population.

Food safety, once viewed primarily as the responsibility of technical and production teams, should be recognized as a company-wide, end-to-end business imperative. As food safety risks become more complex and their potential consequences more significant, they pose an increasing threat to food companies. Accordingly, food safety and food safety risk management should be treated as core governance issues and addressed regularly as part of the board of directors' oversight responsibilities.

Addressing Food Safety Risk at the Board Level

The New Zealand Government's 2025 publication, Food Safety Good Governance Guide for Directors,⁸ clearly outlines the board's roles and responsibilities with regard to food safety. They include the following:

• Creating an environment in which food safety can operate successfully
• Holding management accountable for implementation of the food safety system.

These roles were expanded in a four-step food safety governance model:

• Step 1: Commit to food safety governance
• Step 2: Lead a food safety culture where food safety is clearly stated as a core value
• Step 3: Ensure that food safety risk is identified, assessed, and managed
• Step 4: Monitor food safety system design and company performance.

The above four steps are actually interlinked. The purpose of food safety risk management is to protect both the company and consumers by first identifying and then managing the risk. Food safety risk is present when a foodborne hazard (biological, chemical, physical, or undeclared allergen) is combined with exposure to the hazard, usually through consumption of food containing the hazard.

Current legislation in many jurisdictions and industry best practice require that risk-based measures (RBM) be developed and adequately resourced to ensure that food is safe and suitable (i.e., fit for purpose). As such, companies must use a structured process to assess food safety risks and develop controls, then implement those controls and maintain records. They must also verify the system's effectiveness and report on performance.

Risk assessment and the identification of appropriate controls are particularly challenging in the food industry. Raw material inputs are often agricultural products that can vary significantly from year to year and even from batch to batch. At the same time, companies must navigate competing priorities, including sustainability goals, cost pressures, consumer expectations, and in some cases, conflicting regulatory requirements.

Food safety performance also depends heavily on frontline employees, whose day-to-day actions play a critical role in managing risk (Figure 2). Consequently, food safety is influenced by a complex interplay of technical, human, social, and environmental factors. Because these factors are continually changing, food safety risks are constantly evolving, requiring organizations to regularly review and update their food safety systems and controls.

Managing these risks through a comprehensive Risk Management Program (RMP) is therefore essential. Effective RMPs take a broad, enterprise-wide view of risk, extending beyond manufacturing operations and supply chain activities to include business support functions such as marketing, research and development, human resources, and finance. Decisions made in each of these areas can have significant implications for food safety performance.

This holistic approach aligns with the principles of enterprise risk management (ERM), which leading organizations use to identify, assess, and manage risks that could threaten the achievement of business objectives. ERM provides a company-wide framework for evaluating risks across financial, operational, strategic, and hazard-related domains.

The ERM process typically includes five core elements: strategy and objective-setting, risk identification, risk assessment, risk response, and ongoing communication and monitoring. For food businesses, this process will almost invariably identify food safety as a critical enterprise risk. The goal is to determine which risks, after accounting for existing controls, remain at an unacceptable level or have the potential to escalate, thereby requiring additional management attention and oversight.

While many organizations have established ERM processes, the information ultimately presented to the board does not always provide the strategic perspective needed for effective oversight. Board reporting often focuses on documenting and "closing out" individual risks rather than examining the organization's ongoing challenges, emerging threats, and the effectiveness of its long-term risk management strategy. For this reason, the ERM process should be complemented by a structured strategic discussion of food safety risk, led by a qualified food safety professional or an independent advisory panel. This provides directors with the context needed to interpret risk trends, challenge assumptions, and assess whether the organization's risk management approach remains fit for purpose.

The board plays a critical role in setting the organization's priorities and risk appetite. When food safety is absent from board-level discussions, it can send a message throughout the organization that it is not considered a strategic risk. However, given the breadth of responsibilities facing directors, it is unrealistic to expect the full board to possess the time or technical expertise necessary to oversee all aspects of food safety risk in detail. For this reason, food safety risk is often best addressed through the board committee responsible for risk oversight, typically the audit and risk committee. The strategic food safety risk review described above aligns well with this committee's responsibilities and can provide the specialized expertise needed to support effective oversight.

Regardless of where detailed oversight resides, food safety should remain visible at the full board level. At a minimum, directors should receive an annual update on food safety performance and emerging risks. These updates should include both leading indicators, such as corrective action closure rates, audit findings, and training compliance, and lagging indicators, such as consumer complaints, product withdrawals, and recalls. Together, these metrics provide a more complete picture of the organization's food safety performance and risk profile.

When communicating with the C-suite and the board, food safety professionals must move beyond technical terminology and articulate risk in business terms. Technical leaders should be prepared to discuss the financial, operational, and reputational implications of food safety failures. Framing food safety in terms of potential losses, brand erosion, regulatory consequences, and business continuity risks helps ensure that the issue receives appropriate attention at the highest levels of the organization.

Best Practices for Food Safety Control Systems

Effective board oversight ultimately depends on confidence that appropriate food safety controls are in place and functioning as intended. Industry has spent many years identifying best practices for food safety control systems. Structured processes include: 

• Food sector good operating practices (GOPs)
• Good agricultural practices (GAPs)
• Good manufacturing processes (GMPs) and good hygiene practice (GHPs) 
• Hazard analysis and critical control points (HACCP)
• Verification (i.e., how to check if the controls are working). 

It is critical that companies understand not only how they are performing, but also what factors are limiting their ability to deliver on key programs. Most organizations rely on auditing and testing to verify supplier performance and assess their own operations. However, these tools provide only partial visibility into risk and performance. Boards should recognize that both auditing and testing have important limitations, and that simply conducting more audits or collecting more samples does not necessarily improve risk management. Emerging data-driven approaches, including predictive risk indicators and integrated performance monitoring systems, may help address some of these limitations (Figure 3).

This has important implications for the information reported to boards. Organizations often focus on easily measured, lagging indicators that reflect problems after they have occurred, such as recalls, the number of audits conducted, or overall audit scores. While these metrics have value, they provide limited insight into emerging risks. Board-level reporting should place greater emphasis on leading indicators that signal weakening controls before failures occur. These include measures such as sanitation staff turnover, quality manager turnover, and frontline training compliance. Effective oversight should also extend beyond internal operations to include major external risk factors, including water availability, geopolitical instability, and the growing intersection between food safety and sustainability initiatives.

Conclusion

Food safety is an existential risk for any food company. Because effective food safety systems often prevent problems before they become visible, there can be a tendency for boards to devote limited attention to the subject. This creates a governance challenge: while boards are ultimately accountable for overseeing material business risks, most directors do not possess deep technical expertise in food safety, and the tools used to report to them (i.e., ERM) typically end up at a very high overview level, which fails to effectively communicate risk.

Boards should not be expected to manage the technical details of food safety systems. Their role is to establish strong governance, promote a culture in which food safety is recognized as a core company value, and ensure that robust processes exist to identify, assess, manage, and monitor food safety risks. They must also be able to challenge management effectively and evaluate whether the organization's food safety strategies are appropriate and the systems are operating as intended. Responsibility for detailed oversight is often best delegated through the board's risk governance structure, supported by appropriate internal and external expertise.

To fulfill these responsibilities, boards require regular, high-quality reporting that translates technical food safety issues into business risk terms. Reporting should provide visibility into both internal and external risk factors, and clearly communicate changes in risk exposure over time, as well as include meaningful leading and lagging indicators. Most importantly, board discussions should focus on whether management is operating within the organization's defined risk appetite and whether sufficient controls are in place to prevent harm. Ultimately, effective food safety governance is not only a matter of protecting corporate value, but also of fulfilling the industry's fundamental responsibility to protecting consumers.

Acknowledgment

This work was supported in part by a grant from Dairy Management Inc. to Abby Snyder, Ph.D.

References

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2. Tidjani, F., M., Selten, and M. van Galen. "The EU Food and Drink Industry: A Competitive Analysis." Wageningen University & Research. 2025. https://research.wur.nl/en/publications/the-eu-food-and-drink-industry-a-competitiveness-analysis/. 
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7. European Food Safety Authority (EFSA). "Shiga toxin-producing E. coli (STEC) O104:H4 2011 outbreaks in Europe: Taking Stock." Scientific Report. October 3, 2011. https://efsa.onlinelibrary.wiley.com/doi/10.2903/j.efsa.2011.2390. 
8. New Zealand Government. Food Safety Good Governance Guide for Directors. 2025. https://www.nzfssrc.org.nz/assets/news-folder/2025-Food-Safety-Good-Governance-Guide-for-Directors.pdf.