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Directors’ Liability Survey 2022 – Regional overview Great Britain

Cyber Risk Management|Medioambiental
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By Eve Richards and Angus Duncan | June 16, 2022

Cyber attack and data loss maintain first and second positions in the top five risks to directors and officers for the second year across all regions

As a truly global survey across all continents and a broad spectrum of industries, company types and sizes, it is interesting to take a more in-depth look at how responses from Great Britain compared to those from other regions.

It’s no real surprise cyber attack and data loss have maintained their respective first and second positions in the top five risks to directors and officers for the second year across all regions, including Great Britain.

This year’s addition of cyber extortion to the top five list – at number three overall and number four for G.B. – indicates the level of concern the entire topic of cyber is posing to boards globally. There is little doubt this has been exacerbated by current geopolitical issues.

It is not only the impact of cyber attacks and extortion to the business operations to consider here, but also the potential for shareholder litigation following stock drops resulting from the reputational damage caused by such cyber incidences.

Data loss events too could transcend into D&O claims following losses suffered by the business from the associated fines and penalties. The trend for event-driven litigation means anything could result in a securities class action.

Boards are responsible for ensuring robust and resilient business platforms and the robustness of companies’ IT systems has been severely tested in the context of global lockdowns. This pattern will undoubtedly continue as we remain in a period of potentially ever-increasing exposure to cyber risks in light of the Russia/Ukraine conflict.

This all comes at a time when capacity and the cost of insurance in the cyber market is extremely challenging. Could we potentially see the return of failure to maintain adequate insurance type claims around cyber exposure?

It is interesting to note G.B. survey respondents ranked these three risks proportionally less significant than all other regions by quite a margin. Meanwhile, regulatory risk, including threat of fines and penalties and risk of health and safety/environmental prosecutions, was almost equivalent to data loss and cyber extortion in the level of concern it poses to G.B. respondents. In fact, cyber extortion only comes fourth for G.B., being displaced by risk of health and safety/environmental prosecutions.

Post-pandemic, there is a risk that we will see an increase in activity from regulators whose activities have been constrained during lockdown. This could result in a significant uptick in costs on already struggling businesses as they try to find their feet post-pandemic.

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Authors


Executive Director
Coverage Specialist, FINEX

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