Lockton Security Incident

Skip to main content ARTICLES / JANUARY 23, 2024 D&O risks to watch in 2024 Back Back Board members are having to steer businesses through a challenging environment after a series of social, political, and economic shocks over the last few years. Weve summarised here the main risks for boards in 2024 as outlined in a December 2023 Lockton webinar and the consequences these may have from an insurance perspective. Insolvency risk Corporate revenues are declining amid lower pricing power and weaker global demand. At the same time, elevated costs are squeezing profitability. High energy costs are impacting some sectors more than others, with transportation, hospitality, food and beverage companies, and chemical companies among those facing the greatest pressure. The number of registered company insolvencies in England and Wales in November 2023 was 21% higher than in the same month in the previous year, according to the UKs Insolvency Service (opens a new window) . Similarly, US bankruptcy filings grew 21% year-on-year in November 2023, according to the American Bankruptcy Institute (opens a new window) . Commercial chapter 11 filings increased 141% during this period. Furthermore, global business insolvencies are set to increase by +6% in 2023 and +10% in 2024, according to trade credit insurer Allianz Trade (opens a new window) . Corporate liquidity positions are worsening and unlikely to improve before 2025, and fresh capital is less available following a series of interest rate hikes in major economies around the world. As a result, businesses need to preserve cash. Continuing supply chain challenges are being further complicated through economic sanctions and import controls (tech, semiconductors). Risk monitoring In this challenging economic environment, investors are closely watching what directors and officers are doing to protect assets and their valuations and may consider bringing suit against management if they suspect wrongdoing. To help mitigate...

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