SYDNEY, April 25, 2023 – Economic and cyber risks, particularly those associated with data loss and ransomware, are causing increasing concern for Directors and Officers, says a global Directors Liability 2023 survey from WTW (NASDAQ: WTW) and Clyde & Co, a leading global law firm.
The Directors’ and Officers’ Liability 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 are:
Geopolitical risk ranks highly for businesses in Europe, Asia and Latin America Jeremy Wall, Head of Global FINEX (Financial & Executive Risks), 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.”
Jill Stewart, Australasian Head of FINEX, commented: “Cyber risks remain the primary concern for Directors in the Australasia region, an unsurprising perspective that is no doubt driven by last year’s major data breaches including Optus, Medibank and MyDeal. Meanwhile, the risk ranking of health and safety prosecutions has increased locally, reflective of the many WHS legislative changes that have occurred across Australia in particular, and our heightened understanding of the need to effectively manage psychosocial hazards in the workplace.”
“However, despite investors and financial markets increasingly demanding a compelling ESG plan and demonstrated path to net-zero, Australasia is one of only two global regions where climate change is considered a major risk by Directors. Australasia is also the only region where the importance of insurance cover for ESG-related risks was highlighted. This level of awareness and concern is likely intensified by our region’s exposure to natural disasters, whether that be flood, fire, cyclone or earthquake.”
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.”
A full copy of the report can be found here: Directors' and Officers' Liability Survey 2023.
At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.
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Clyde & Co is a leading global law firm, specialising in the sectors that underpin global trade and commercial activity, namely: insurance, transport, infrastructure, energy, and trade and commodities. It is globally integrated, offering a comprehensive range of contentious and non-contentious legal services and commercially-minded legal advice to businesses operating across developed and developing markets. Clyde & Co is committed to operating in a responsible way. This means progressing towards a diverse and inclusive workforce that reflects the diversity of its communities and clients, using its legal skills to support its communities through pro bono work, volunteering and charitable partnerships, and minimising the impact it has on the environment. The firm has 440 partners, 1800 lawyers, 2500 legal professionals and 4000 staff in over 50 offices [and associated offices] worldwide.
