Over the last several years, UK regulations have expanded the scope of directors and officers (D&O) liability and that trend shows no signs of stopping, according to a recent survey from international law firm Allen & Overy.
According to the survey, D&Os are exposed to a higher amount of personal liability than ever before. Since the survey began in 2011, D&Os have become personally liable for a variety of new offences, including bribery, corruption and fraud, environmental infractions, and lax health and safety.
The key findings were:
Over a third of respondents to our survey (33%) have experience of a claim or investigation involving a director of their company, up from 27% a year ago.
Nearly one in four (24%) has experience of a cyber attack or loss of data significant enough to have been brought to the attention of the board in the last 12 months.
Only 43% are aware of the Financial Conduct Authority’s proposals to extend the Senior Managers Regime to all directors of FCA regulated UK companies.
Nearly a quarter (24%) are not aware of the implications of the General Data Protection Regulation for their business.
Some 78% of those who responded are not aware of the individual personal liability that board members can incur for incorrect tax returns in some jurisdictions, such as Italy, Germany and Greece.
As tougher regulations, such as the GDPR, place more responsibility on businesses, D&Os could be held personally liable for failing to prioritise compliance at their organisations. These fears are reflected in the survey’s top five risks facing directors, which include the following:
1. Regulatory and other investigations and inquiries
3. Risk of data loss
4. Criminal and regulatory fines and penalties
5. Concerns in a post-Brexit landscape
In order to safeguard your business along with your directors and officers, it is essential that you purchase a comprehensive D&O insurance policy. For more information about D&O insurance, contact the professionals at A-Plan today.