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Survey Report

8th Directors’ Liability Survey

What are the top risks facing Directors and Officers?

April 21, 2021

Find out what international board members fear most for 2021 in our latest Survey Report, collated by our global colleagues and Clyde & Co contributors.
Financial, Executive and Professional Risks (FINEX)

Welcome to the 2021 report from Willis Towers Watson in partnership with Clyde & Co LLP. For the first time, this report is a truly international affair, with contributions from colleagues across our offices including the UK, the US, Australia, the Netherlands and Spain.

The geographic spread of the respondents to our survey can be seen below along with their broad industry distribution.

This illustration shows the different industries our respondents are from.
Industry distribution

Source: 8th Directors & Officers liability Insurance Survey

This illustration shows the different country of office our respondents are from.
Country of office

Source: 8th Directors & Officers liability Insurance Survey

We took the opportunity this year to ask new questions, some of which are inspired specifically by the COVID-19 pandemic and some of which are simply reflections of changing social mores and you will see in this report that considerably effort has been taken to show the comparison between the perceptions of the risks in the different regions.

Our survey in 2020/21 shows the impact that COVID-19 has had on the respondent’s perceptions of the risks facing directors. The highest rated risks continue to be Cyber Attack and Data Loss, which have been in the top two, although changing order, for the last three surveys. Given the widely-publicised statements that home working has increased these risks, it is unsurprising to see them feature so highly (see article Top 5 D&O Risks in the report for more discussion).

Insolvency does not feature particularly highly as a risk for most of the respondents.

What might be more surprising is that despite considerable anticipation of a landslide of insolvencies to come, insolvency does not feature particularly highly as a risk for most of the respondents. In fact, as discussed in our article Insolvency, in many jurisdictions, insolvencies are at their lowest level in recent times – perhaps reflecting the success of government measures such as furlough and changes in “wrongful trading” laws.

Despite a year of unprecedented turmoil across the world as a result of the COVID-19 pandemic, the worldwide trend of increasing focus on director exposures has not let up. In England & Wales, we have seen a slew of new laws, regulations and consultations, from the Pensions Act 2021 to the FCA listing rule requiring a TCFD “comply or explain” statement to be made by premium listed companies and the consultation regarding audit and governance, all of which impose or talk about imposing new obligations on directors (see the Regulatory Exposures article in our report for more information).

Board diversity is becoming not just a concern, but a mandatory part of business.

With board diversity class actions in the US and NASDAQ imposing minimum board diversity levels and similar regimes being considered by the FCA in the UK, board diversity is becoming not just a concern, but a mandatory part of business, at least for some companies. Climate change too is being forced into the board room as a leading issue. As well as legal actions being brought in the US and in Australia, both the Australian Prudential Regulatory Authority and the UK Prudential Regulatory Authority are looking at climate-related stress tests for banks and insurers. In the US, the Commodities Futures Trading Commission and the SEC have both issued statements regarding the seriousness of climate change as a risk to businesses and in the UK, climate change is being included as a key risk which has to be considered by boards and pension trustees (see the Climate Change article in our report for further information).

Climate change too is being forced into the board room as a leading issue.

The COVID-19 pandemic has also coincided with and intensified a hard market for directors’ and officers’ liability insurers, unlike any seen before. In the last article in this report, we look at the impact the hard market has had on our respondents and the limits that they buy.

Download the report to:

  • Delve into the findings of interviews with over 250 directors, non-executive directors, partners, in-house lawyers, risk officers and compliance professionals from across the globe
  • Discover the impact of cyber attacks and data breaches to your organisation
  • Find out the top topics that you should be aware of as they are moving quickly to the top of the agenda of boards.
Title File Type File Size
D&O Liability Survey 2021 PDF 1.6 MB

Executive Director
Coverage Specialist, FINEX

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