D&O concerns rise over economic & cyber risks
Economic and cyber risks, particularly those associated with data loss and ransomware, are causing increasing concern for directors and officers, according to a global directors’ and officers’ liability 2023 survey from WTW and Clyde & Co.
The survey identifies the key risks for directors across the globe (covering UK, Europe, Asia, Australasia, Latin America and North America) with responses from 40 countries around the world. Economic risk was considered the top risk for businesses by 63% of global directors, closely followed by cyber risk on 62%.
Geopolitical risk grew in importance being placed in 4th place up from 6th last year. Overall, 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.
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 (69%), closely followed by recession (67%).
Other key findings of the report include:
COVID-19 and Brexit risks, while still in the top five, continue to decrease in importance
Climate change has 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).
Geopolitical risk ranks highly for businesses in Europe, Asia and Latin America, 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 said: “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.”