According to a new survey from brokerage WTW and global law firm Clyde & Co, economic and cyber risks, particularly those associated with data loss and ransomware, are causing increasing concern for Directors and Officers (D&O).
The Director’s and Officers’ Liability survey identifies the key risks that surround Directors across the globe. The survey covers the UK, Europe, Asia, Australasia, Latin America and North America, with responses from 40 countries around the globe.
According to the survey, economic risk was considered the top risk for businesses by 63% of global directors. Closely behind was cyber risk with 62%.
In third place was regulatory/legislative change, which managed to make it into the top three for its first year.
Geopolitical risk grew in importance being placed in fourth place up from sixth last year.
Both WTW and Clyde & Co stated that the results are consistent with 2022 with cyber, data loss and cyber extortion continuing to dominate the highest ranks of risks for directors. In percentage terms, cyber attacks and data loss are still the most significant with 62% of directors concerned.
Meanwhile, for the first time, the survey also broke down economic risk into three perils: inflation, recession and the job market with most global directors citing inflation as the biggest economic risk at 69%, closely followed by recession at 67%.
Additionally both COVID-19 and Brexit risks still remained within the top five risks, however they both continue to decrease in importance, which ultimately may continue into 2024.
At the same time, climate change made it into the top five risks for directors in GB (where it is the number one risk) and Australasia (where it is number four).
Jeremy Wall, head of global FINEX, WTW, said: “We are delighted to be launching the 2023 Directors’ and Officers’ Liability Survey report and are again grateful for the contribution from Clyde & Co. With a volatile business environment resulting from the current geopolitical uncertainty, it is no surprise that geopolitical risk is rising on the list of Directors’ concerns.
“The advent of technology ensures that cyber will continue to be of major concern and we are certainly seeing more demand for cyber insurance as a result. We are delighted to launch this report as we know it is being sourced as a great resource to support Directors and risk managers when refining their risk management strategies.”
James Cooper, partner, head of insurance, Clyde & Co, added: “With companies and their leaders operating in an almost unprecedented climate of uncertainty, this year’s survey provides timely and valuable insights into the evolving risk landscape. We asked directors about 28 risks and overall the results are very consistent with last year, with cyber risks ranking significantly above other risks. There have been developments, however, with notable new risks including systems and controls, sufficient cyber expertise at board level and employee crime and cyber-crime as a sub-set of crime risks.
“While the survey highlights geographical variations, it also sheds light on marked differences between how directors and risk managers at small companies are rating risk compared to those at large enterprises. But regardless of business size, successfully navigating risk has never been more difficult. Directors need a forward-looking view, to anticipate threats and challenges.”
