Directors and Officers Risks

Directors and senior leaders play key roles in the success and improvement of their organisations, but these employees can also be sizable liabilities. Misconduct or negligence committed by a director or officer can result in costly legal claims, government-issued penalties and significant damage to an organisation’s finances and reputation.

In order to mitigate risks associated with directors and officers, employers should educate themselves on current trends related to directors’ and officers’ (D&O) insurance and claims. A D&O claim can arise from a number of potential sources, but certain causes have become more common in recent years. Employers should consider the following potential sources of a D&O claim and assess how they can minimise the chance of a problem arising:

  • Insolvency—Insolvency often results in claims being filed while plaintiffs attempt to recoup losses from senior leaders. Given that many experts are expecting the UK economy to struggle in the near future, insolvency—and related claims—may become even more frequent.
  • Cyber-crime—Directors and officers may be blamed if proper cyber-security measures were not implemented that could have prevented a cyber-attack. With remote work expected to continue to be prominent across many different workplaces, technology will continue to play a significant role for employers. With that in mind, cyber-criminals may continue to increase their activity and seek out vulnerable targets.
  • Misconduct—Younger workers tend to take bullying, harassment and other types of misconduct in the workplace very seriously. If it is alleged that directors and officers failed to provide a safe work environment for their employees, a D&O claim may be likely.
  • Lack of diversity—Directors and officers may be held accountable if it is alleged that an organisation has not done enough to promote and encourage diversity in the workplace. Activists against systemic racism have become more vocal recently, and UK employers with over 250 employees are now required to report gender pay gap information.
  • Environmental issues—Societal concern regarding climate change has increased in recent years. Leaders may be held to a higher standard when it comes to making decisions that are environmentally conscious. If an organisation is suspected of contributing to global warming or causing an environmental incident, directors and officers may be blamed.

For more information on risks related to directors and officers, contact us today on 0800 161 7008.