CGF ARTICLES, OPINIONS & EDITORIALS
When the D&O cover is not enough (2012-10-08)
February 19,
2015 3690 3690 
In the constantly changing area of director’s and prescribed officer’s (D&O) liability, it has become clear that significant D&O exposures are no longer limited; recent legislative and regulatory developments require prudent companies to take a fresh look at D&O exposures and related insurance coverage issues.
In this regard, a company must now -- more than ever -- understand the multitude of laws, regulations and nuances in which it operates. These laws and regulations change regularly and if left unchecked, can leave an unprepared company exposed to uncovered and often unexpected risks. And as matters such as class actions continues to draw attention amongst informed activists, companies will need to seriously rethink the manner in which they provide their executives the type of protection required that limits their risk exposure, particularly when matters turn nasty. Considering the extent to which personal liability is now attached to directors as well as prescribed officers in their several and joint capacities, companies should reassess the cover they have in place. Of course the question arises as to how much cover is needed, and will this cover only protect the employee when they are affected in their immediate place of employ? Or might the cover also need to cover a full time director whilst they act as a non-executive director, at the behest of their full time employer, in another company?
In terms of risk, undoubtedly it would be risky occupying a directorship position, or any other business leadership position knowing full well that these posts attract intense scrutiny of the employee’s actions, which are not necessarily restricted to an eight-to-five job. As business working conditions have evolved with the advent of ubiquitous computing and borderless office geographies, the reality is that these executives are ‘at work’ pretty much all the time, and exposed to many new forms of risk which didn’t exist in times gone by. That said, has the type of protection currently being provided evolved sufficiently enough to cover these working conditions presented in today’s complex business environment, where many new risks are posed -- for example -- by the business social media channels which may still not be fully understood?
