Directors and Officers Prioritize Litigation and Cybersecurity in Risk Management, Survey Finds

Directors and Officers Prioritize Litigation and Cybersecurity in Risk Management, Survey Finds

Directors and officers are placing increasing emphasis on litigation and cybersecurity when making decisions about their liability insurance, according to a recent survey. The “Directors and Officers Liability Insurance Survey,” conducted by Willis (a WTW business) in partnership with Clyde & Co., highlights these and other key concerns.

The survey indicates that concerns about health and safety are paramount for a large majority of respondents. A significant 80% of directors and officers consider these risks “very or extremely important” to their organizations. Physical workplace risks were cited most frequently (43%), followed by employee mental health and well-being (28%) and personal matters (12%).

For the first time since 2018, civil litigation and third-party claims have re-emerged as significant concerns. Sixty-three percent of respondents identified these issues as major risks. Interestingly, smaller firms (under $50 million in revenue) and mid-sized companies ($1 billion to $5 billion in revenue) were more likely to flag litigation as a primary concern. Conversely, companies with revenues exceeding $5 billion expressed greater concern about diversity, equity, and inclusion issues, as well as bribery and corruption.

Cybersecurity and data privacy continue to pose considerable challenges as well. Data loss and cyberattacks, including extortion, are seen as “very or extremely important” by 77% of those surveyed. However, the survey suggests a possible lack of board-level expertise in these critical areas.

Artificial intelligence saw lower ranking, with 51% viewing it as a critical risk. This perception may change as related regulations evolve.

Despite the growing list of concerns, cost remains the single biggest factor in D&O insurance purchasing decisions.

“The latest survey results underscore the diverse challenges directors and officers face today,” said Angus Duncan, global D&O coverage specialist at Willis.

Duncan also commented on the importance of proactive risk management in optimizing coverage and minimizing financial and reputational exposure.

James Cooper, partner and head of financial institutions and D&O at Clyde & Co., noted that the D&O insurance landscape is being reshaped by a range of evolving risks, from geopolitical shifts to advances in technology.

“Identifying the most critical risks and understanding where pressure points may appear is crucial in successfully navigating existing and emerging challenges,” he said. He added that appropriate insurance coverage must stay current with emerging threats such as cyber threats and data breaches.