Cyber and data loss overtake regulatory concerns as top priority facing senior managers

Willis Towers Watson and Allen & Overy launch their sixth Annual D&O Survey Report, outline the changing risk culture affecting senior management

London, UK (Nov. 29, 2018) – Willis Towers Watson, in conjunction with Allen & Overy, has launched its sixth annual Directors’ liability report – “D&O: Personal Exposure to Global Risk” – which outlines the changing risk culture affecting senior management.

According to the survey, cyber-attack and data loss/breach top the list of risks which are causing directors most concern. These risks of cyber-attack and data loss have now overtaken regulatory and other investigations as the most concerning for directors. 51% of public companies this year said that they had experienced either a significant cyber-attack or a sizeable data loss in the past year. The comparable figure in 2017 was just 30%.

When asked to prioritise the risks facing their businesses, more than half of all those questioned (52%) described the risk of data loss, data breach or risks associated with the EU’s new General Data Protection Regulation (GDPR) as very or extremely concerning. Exactly 50% ranked cyber-attack as causing them the same level of anxiety. When combined – as the two risks are so often inter-related – they become a huge concern for business leaders. The recent fines imposed on supermarkets and the continuing reputational damage as a result of such breaches, supports how seriously these are taken.

Other key survey findings:

  • 43% of large employers and 38% of listed companies have experienced a regulatory claim involving a director in the last 12 months; regulatory investigations therefore remain unsurprisingly in the top three risks
  • The regulatory focus on personal accountability is changing company behaviour, with 60% saying it is impacting decision-making processes
  • 72% of public companies are worried about the current economic climate and 72% about geopolitical risks – an increase from the 59% who felt geopolitical uncertainties created a significant risk last year
  • Health and safety legislation impacting on a company’s business is now a significant concern for 37% of respondents, as against just 18% of those surveyed last year.

Francis Kean, Executive Director, FINEX, Willis Towers Watson said:  “It is the breadth as well as the depth of the concerns expressed by senior managers in this survey which is striking. From health and safety to criminal activity and from increased risk of employment claims to climate change the spectrum of potential sources of liability for directors is wider than it has ever been. For the first time, the presence of an active and increasingly sophisticated plaintiff’s bar ready to bring claims against directors anywhere in the world also features as a key concern. Sitting on top of all this is the almost daily reality for companies of cyber-attack or the risk of serious data loss. Never has there been a more important time for directors to understand the personal liability protections available to them.”

Joanna Page, Partner and Head of A&O’s Insurance Litigation group commented: “Seven years on from the launch of our first report focusing on directors’ liabilities we can clearly see that conditions have become increasingly challenging for company directors. High-ranking individuals in public and privately-held corporations face unprecedented scrutiny and bear the brunt of global enforcement efforts by regulators to combat corporate failings. For the first time, we see concerns dominated by the threats of cyber-attack and data loss – fears that are not new but are rapidly moving up the agenda. If you are a senior manager or director, it is important to be entirely comfortable about the scope of your personal liability protection. Be clear on your own responsibilities and reporting lines and brace for the renewed regulatory focus on individual conduct.”

Download the report here.

Survey Methodology

161 directors, non-executive directors, partners, in-house lawyers, risk officers and compliance professionals, working all over the world were surveyed across a wide variety of industries, with the majority (58%) working in mid-sized companies employing 500-4,999 employees and 28% working in large companies employing more than 5,000. Just over half of those surveyed, 85 respondents, came from listed companies. In all, 78% came from businesses headquartered in the UK, 10% in Asia Pacific, 8% in Europe, 4% in North America and 1% in the Middle East and Africa.

About Willis Towers Watson

Willis Towers Watson (NASDAQ:WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has over 40,000 employees serving more than 140 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at willistowerswatson.com.

About Allen & Overy

Allen & Overy is an international legal practice with approximately 5200 people, including some 530 partners, working in 44 offices worldwide. In this press release, ‘Allen & Overy’ means Allen & Overy LLP and/or its affiliated undertakings. The term ‘partner’ is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP’s affiliated undertakings. Learn more at www.allenovery.com.

SOURCE: Willis Towers Watson

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