European business leaders fear rising D&O risk from Covid and mounting liability

A quarter of senior leaders in Germany, France, the UK, Spain, Italy and Sweden fear that actions taken during the pandemic could lead to claims against them, with more than half believing their personal liability has increased during the past 18 months, according to a new survey by QBE. The poll of 3,000 business leaders across the six countries found that 56% of respondents feel their personal liability has increased since the start of the pandemic. This rises to 70% for larger organisations. Fears over a rise in personal liability were greatest in Spain at 69%, followed by Germany and Italy both on 61%. Next came France and Sweden on 58%, with leaders in the UK least concerned on 48%. Geoff de Mallet Morgan, head of financial lines for QBE International, said: “There are plenty of instances where senior leaders are making high-profile decisions in times of significant stress with access to incomplete information. It isn’t surprising therefore that those we surveyed are worried about claims as a result of actions they have taken since March 2020. Particularly given that they have needed to adapt to an unprecedented work environment, which opened up increasing risks around employee wellbeing and cybersecurity, while simultaneously dealing with concerns around financial stability of the business.” Respondents were most concerned about experiencing a business issue cause by financial turmoil (27%), then came action taken during the pandemic (25%), followed by fears over competition and profitability (23%), and a cyberattack/data breach (22%). The survey also reveals that 59% of respondents believe there is now greater emphasis on senior management’s accountability than in the past. “Senior leaders are increasingly being held to account when a business issue arises and, as a result, there is a natural evolution where the decisions they made during the pandemic are subject to retrospective review and may well lead to claims. This also builds upon recent trends we have seen in social inflation, where strong opinions on the performance and decision-making of senior leaders manifest in them increasingly being held personally accountable for their actions,” said Morgan. The business leaders also expressed concerns that the pandemic had negatively impacted the risk profile of their organisations. Some 36% said the pandemic has increased financial/economic risks, while 32% said it has increased concerns around employee health and safety. Almost a quarter cited increased cybersecurity or data-breach risk as a significant external factor negatively impacting their corporate risk profile. The far-reaching survey suggests pressure is mounting on senior leaders as they take on more responsibility. Some 68% said their remit and responsibilities have increased in the past five years, with more than a quarter (28%) saying these had increased significantly. The most common reason cited was the increased use of technology and an ‘always on’ culture. More than half (52%) of respondents have felt under pressure during the past 18 months as a result of increased workload and responsibility. Three quarters said this has negatively impacted them personally, including feeling stressed (36%) and having trouble sleeping (22%). Just under a quarter (23%) said they have worried about making mistakes as a result, while 10% said they had made mistakes because of their increased responsibilities. “Not only are senior leaders more likely to be held to account if something goes wrong, but the breadth and depth of their responsibilities is increasing. This can naturally place greater pressure and stress on these individuals and, as our research shows, this can lead to mistakes and the possibility of claims as a result,” said Morgan. The survey also reveals concern about D&O cover. According to the research, just 30% of senior leaders surveyed believe they are adequately covered if a claim is made against them. About a fifth (21%) wished there were more structures in place to protect them.

European business leaders fear rising D&O risk from Covid and mounting liability

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