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This is a very interesting report created by Willis Towers Watson and Clyde and Co. Discussing the results of a survey of the top concerns for Directors and Officers, as related to Directors and Officers (D&O) Insurance. It is not unexpected to see cybersecurity risk is up there as one of the top concerns for boards. When interpreting the report in line with recent geopolitical events and developments in cybersecurity risk management regulations, the challenges that lie ahead for boards of directors and D&O insurance are clear. Pages 11 – 14 places cyber attacks as mainly the top risk for Directors and officers by region, sector and financial impact. Page 16 places cyber risk cover, legal costs, claims management and cover for fines and penalties as the top D&O coverage areas.
One expects that with increased geopolitical tension (use of cyber as a domain of military operation) and the development of U.S, EU and Australian cybersecurity risk management regulation the concerns of directors, officers and insurers are going to crystalize. Historic coverage for cyber attacks is rapidly falling away with the introduction of exclusion clauses, and cyber regulation is shifting cyber compliance ‘Left of bang’ directly to board members. Increasing their direct legal and corporate regulatory compliance risk (e.g. SEC proposal, EU NIS2, DORA), affecting D&O insurance. When one reads page 16 of the report cybersecurity, cybersecurity risk management, cyber regulatory compliance and legal risk can be attributed to almost every aspect of D&O coverage, across every region.
Directors and directors exposure to cybersecurity risk management regulation and compliance requires active management by both the insured and the insurer. Regulators expect boards to oversight, assure and attest cybersecurity risk management compliance. Insurers (D&O and Cyber) can use this information to better underwrite policies and challenge compliance ‘Right of bang’.
Ted Dziekanowski Celso De Azevedo FCIArb Rachel V. Rose, JD, MBA Stephen Pitt-Walker, JD, FGIA
#cybersecurity #cyberriskmanagement #cyberregulation #insurance
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