Directors and officers are increasingly focused on litigation and cybersecurity risks as key factors influencing their liability insurance decisions, according to the latest Directors and Officers Liability Insurance Survey by Willis, a WTW business.
The report was in collaboration with Clyde & Co.
According to the survey, 80% of directors and officers consider health and safety risks to be very or extremely important to their organizations. Physical workplace risks were the most cited concern (43%), followed by employee mental health and well-being related to work (28%) and personal matters (12%).
For the first time since 2018, civil litigation and third-party claims re-emerged among the top seven concerns, with 63% of respondents identifying them as significant D&O risks. Smaller companies, with revenues under $50 million, and mid-sized firms generating between $1 billion and $5 billion, were more likely to cite litigation as a major issue.
Meanwhile, companies with revenues exceeding $5 billion pointed to diversity, equity, and inclusion, as well as bribery and corruption, as key concerns, but did not rank financial distress or bankruptcy as top risks.
Cybersecurity and data privacy remain among the most pressing risks for D&O insurance, with 77% of respondents highlighting data loss and cyber-attacks, including extortion, as very or extremely important.
However, board-level expertise in these areas appears to be lacking. Artificial intelligence was ranked lower, with only 51% considering it a critical risk, though this perception may shift as regulations evolve.
Despite growing liability concerns, cost remains the biggest factor in D&O insurance purchasing decisions. "The latest survey results underscore the diverse challenges directors and officers face today," said Angus Duncan, global D&O coverage specialist at Willis. "Despite increasing concerns over litigation risks, cost remains the dominant driver for D&O insurance purchasing decisions."
He added that companies taking a proactive approach to risk management can optimize their coverage while reducing financial and reputational exposure.
James Cooper, partner and head of financial institutions and D&O at Clyde & Co., noted that evolving risks—ranging from geopolitical shifts to technological advancements—are reshaping the D&O insurance landscape.
“Identifying the most critical risks and understanding where pressure points may appear is crucial in successfully navigating existing and emerging challenges," he said, adding that coverage must keep pace with risks such as cyber threats and data breaches.
