Threat of regulatory investigations and criminal penalties among director’s top concerns as businesses face tougher regulation

Magnifying glass

Directors and high-ranking officers are under greater scrutiny as a result of increased regulation, a survey by Willis Group Holdings and Allen & Overy reveals.

The survey of more than 120 public and private sector businesses found that one-in-four had experienced a claim or investigation involving a director, but more than one-third were unaware of the personal exposure of directors to antitrust enforcement.

Similarly, three out of 10 were not aware that directors can face personal exposure to sanctions penalties, and almost four out of 10 non-executive directors did not understand fully sanctions risks.

The survey also found that regulatory investigations (89%), criminal and regulatory fines and penalties (69%), anti-corruption legislation including the Bribery Act 2012 (58%), securities and/or shareholder claims (51%), and the risk of being sued abroad (50%), were among the top five risks to directors and officers.

Responding to this, Willis’s financial and executive risks executive director Francis Kean said the importance of directors’ and officers’ liability insurance and corporate director indemnification has moved up the agenda.

He said: “These mechanisms allow businesses to offer their leaders a degree of protection and assistance should they find themselves embroiled in civil, regulatory or criminal actions, and thereby help allay the fears of board members so that they can focus on performing their key functions.”

Allen & Overy counsel Andrew Barton added: “As regulatory authorities have responded to public and shareholder pressure in the wake of the credit crisis with more rules, heightened vigilance and tougher enforcement powers, corporate leaders find themselves exposed to even greater risks on a daily basis in going about their roles.”