Tag Archives: Boards of Directors

Boards must understand differences in D&O insurance coverage

The risks exposing corporate boards, especially for public companies, to potential lawsuits continues to increase. As the premiums for directors and officers (D&O) insurance are rising for many companies, it is important to understand the nature of the coverage offered. The type of coverage purchased will affect policy limits available to protect corporate officers.

In her article “Reevaluating your D&O coverage,” Milliman consultant Joy Schwartzman highlights the difference between Side A-only coverage and Side A/B/C coverage and whether the company or the directors are the chief beneficiary of such coverage. She also explains why it’s important for a company and its board to discuss the objective of purchasing D&O insurance and how to maximize the effectiveness of the coverage purchased to meet those objectives.

Greater transparency means new challenges for boards and stakeholders responsible for managing risk

Increasingly, stakeholders are advising corporate board members to have more oversight of how senior executive management executes enterprise-wide risk management. Stakeholders want a better understanding of how companies understand emerging risks, manage known risks with limited mitigation capital, and how risk management activities integrate with other functional activities.

Many boards are aware that the confidential, ad hoc, intuitive decision-making of the past must give way to more formalized processes that can respond to a more transparent environment.

Boards’ responses to the pressure are fragmented. There is no consistency among peer groups, but market leaders are showing a more favorable response.

Read the complete roundtable discussion.