Beazley has released the initial findings from its report which examines the risk concerns of 3,500 global business leaders in a period marked by increasing risks, where missteps can lead to significant financial, legal, and reputational consequences for companies and their directors, regardless of the size or sector.
According to the specialist insurer’s Risk & Resilience report, “Spotlight on Boardroom Risk 2024,” one of the key risks is employer risk, with nearly a quarter (23%) of global executives identifying it as the most significant threat in 2024, up from 18% in 2022.
This reflects the growing challenges posed by hybrid working, changing workplace cultures, and a heightened focus on misconduct. However, 24% of executives surveyed admitted they feel unprepared to address this risk.
Diversity and inclusion also emerged as an area of focus, with 26% of respondents stating they intend to review their hiring and retention policies to improve workplace diversity and inclusion, underscoring the increasing priority placed on these issues within global firms.
Reputation risk has also become a chief concern among business leaders. In an interconnected world, executives are facing more scrutiny from shareholders, regulators, the media, and the public.
The report shows that 20% of global executives view reputational damage as their top business risk, an increase from 17% in 2023. This figure rises to 25% among those in the financial and professional services sectors.
Environmental, social, and governance (ESG) risk is another significant issue for global businesses, with 67% of executives stating that ESG regulation is too complex, while 70% are calling for more regulatory guidance. The challenges posed by conflicting regulations across different jurisdictions have left executives making difficult decisions about compliance and risk management.
In the US, anti-trust rules around ESG in certain states have raised additional challenges for directors’ and officers’ (D&O) liability, prompting some firms and investment funds to retreat from public commitments on ESG.
Bethany Greenwood (pictured above), global head of specialty risks, commented on the report, noting that while macroeconomic conditions appear to be stabilising, D&O risks remain a priority for global business leaders.
“Amid persistent inflation and the ongoing threat of recession, this has been a key threat in recent years,” Greenwood said.
Greenwood highlighted that D&O liability is no longer limited to financial performance issues. Executives are increasingly facing litigation related to cyberattacks, supply chain disruptions, and employment-related matters.
“Failure to comply with ESG regulation has proven another key flashpoint for D&O risk,” she said. “Our latest report highlights how the threat landscape has fragmented and become increasingly multifaceted with executives left scrambling to protect themselves. Understanding the risks and enhancing resilience has never been more important.”
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