Directors and Officers (D&Os) of companies face a lot of responsibility. The game has changed in light of Covid-19, with many new risks arising.
Landscape for loss
Many jobs have been lost due to the economic fall-out we’re facing. Even though a lot of this has been unavoidable, a disgruntled former employee could decide their process of termination wasn’t fair. They could allege that your planning in the crisis was unsatisfactory, and that this negligence was actually the root cause of the company having to downsize the workforce.
As you may have to retrench or reduce salaries, litigation can come your way. In terms of the companies act, stakeholders may try to recover any losses and could even seek remuneration from a D&O.
D&Os must also have awareness about cyber risk as we continue to balance the working-from-home revolution. It is their responsibility to consider this when making the call to work remotely or not.
Any new risks on the horizon that could affect the business should also be communicated to shareholders. It’s essential to articulate how a cyber-related mistake can impact your business, as a key example.
Here are FIVE more ways to mitigate risk.
1) Prioritise director training
Just because D&Os are generally at the top of the food chain, doesn’t mean they don’t need training. Be sure that all risks are properly considered, that training takes place as to how a risk will be managed, and that a plan is in place for any eventuality.
2) Keep a record
Minutes from meetings (even online) and record-keeping must be prioritised too. These steps will have a direct impact on protecting your reputation, and are a useful reminder that bad behaviour can go on record too!
3) Get expert insight
Seeking the advice of your financial adviser, as well as health and safety compliance professionals can make all the difference in a pandemic world. You might not be able to truly consider the risks you are facing without some third-party insight.
4) Be strict
Strict governance and communication needs to be in place. A good example would be a robust cyber policy with rules that everyone has to follow. Cyber related claims due to a lack of security in remote working environments, or when some employees are at home and some at the office, are becoming more common in the new working world we find ourselves in.
5) Get covered
There is incredible responsibility resting on the shoulders of a D&O, which is why short-term insurance cover can really assist to ease some of the burden. D&O liability insurance is one aspect that can become critical to have in place, and should be addressed with your adviser. Like an invisible safety net, it can make all the difference in a time when no one is really sure what could happen next.
For any assistance or advice regarding Directors and Officers Liability please contact us on
031-5021922 or visit our website www.esbrokers.co.za
We would like to thank PSG for writing the article on behalf of Digital Cover magazine.