The Cooper Pharmaceutical Company manufactures and distributes both prescription drugs and medicines sold over the counter by pharmacies and other outlets. More than half of Cooper's annual expenses are for research and development of new products. About 50 percent of Cooper's revenues are derived from an ulcer remedy. The remedy's formula includes a chemical compound that is manufactured in only one chemical plant in the world. There are other similar ulcer remedies on the market, and management concedes that some of them are equally effective. However, Cooper's product was the first on the marker and has acquired a large following among doctors, who usually prescribe it by Cooper's brand name. Management is concerned that any prolonged absence of their ulcer medicine from the market would cause doctors to prescribe another brand, and they might not return to Cooper's brand when it becomes available again.
The testing process for some products is long and complex, sometimes involving several years of testing on dogs, primates, or other relatively long-lived animals, possibly followed by testing on human volunteers. Voluminous records accumulate during such tests and must be retained for many years for use in licensing applications, defense of products liability claims, and future research projects.
Cooper stores its research records in fire;resistive filing cabinets in the records room of its research center. The center also houses research laboratories, offices for research personnel, and animals for research. The research center is located in a sprinklered, fire-resistive building adjacenr. to Cooper's factory. Personnel who handle the animals are thoroughly trained in animal care to ensure the safety of both the animals and employees. Although Cooper has more than 200 employees, its workers compensation claims have been well below the industry average over the last ten years.
The factory building also is fire resistive and is sprinklered in all areas except the clean room. The clean room, used for manufacturing and packaging processes that require complete sterility, has its own air conditioning system with special filtering equipment to eliminate dust and other potential contaminants and other equipment to maintain the sterile atmosphere. Even very slight contamination of the clean room would require the discontinuation of production for several days until sterility could be reestablished. All workers in the clean room must wear special sterile uniforms and surgical masks.
ldentify the risk control measures used by Cooper for each of the following loss exposures:
a. Property loss exposures
b. Personnel loss exposures
c. Net income loss exposures