Emerging risks: directors and officers held more accountable
As risk gets more complex, directors and officers are held more accountable. Since the financial crisis in 2008, claims against directors and officers have grown more frequent, complex and expensive.
One reason for this rise is government legislation that has increased business transparency and placed the responsibility on directors and officers. In fact, after new guidelines from the Sentencing Council came into force in February 2016, the number of health and safety prosecutions against directors and officers tripled. What’s more, the value of the 20 highest fines in 2016 totalled £38.5m, which was just slightly more than all 660 successful prosecutions in 2015-16.
In addition to stricter legislation, the emergence of new risks - such as cyber breaches - has heightened the circumstances surrounding boardroom decisions. With good cause, as each UK business was hit 230k times by cyber attacks in 2016.
As a result, 73% of directors and officers are regularly discussing their organisations’ cyber security policies, according to a recent industry survey. Unfortunately, despite the increased awareness about the potential cyber dangers, only 57% of all UK organisations have taken action to identify and prevent cyber security risks. Failing to take necessary action on cyber threats could make you and your fellow senior directors liable for fines and prosecutions based on your directors’ and officers’ responsibility to prioritise cyber defence.
To help ensure that your organisation’s directors and officers are complying with government legislation and protecting against cyber threats, consider adopting the following best practices:
- Keep clear and concise records on your organisation’s practices as well as any boardroom decisions.
- Conduct a thorough risk assessment along with a health and safety review of your premises and policies.
- Monitor emerging risk areas at the senior level to ensure you can respond to them quickly.
- Update your network security and keep a safe backup of your vital files.