In a time characterised by hybrid work arrangements, evolving workplace cultures, and heightened attention to misconduct, a significant portion of global executives, approximately 23%, identify employer risk as the most prominent threat they face during the current year, a recent Beazley report has revealed.
This represents an increase compared to 18% in 2022, indicating a growing concern among business leaders regarding potential risks associated with their organizations.
At the same time, Beazley’s Risk & Resilience report: Spotlight on Boardroom Risk 2024 report found that nearly a quarter (24%) feel unprepared to deal with this risk.
Ambition to increase diversity and inclusion in global firms is highlighted by the report, with 26% of the executives surveyed saying that they plan to review hiring and retention policies to boost diversity and inclusion in the workplace.
The report examines risk concerns of 3,500 global business leaders in an era of accelerating risk, where a single misstep can have major consequences for a company.
Regarding Environmental, Social, and Governance (ESG) regulations, analysts have observed their significant influence on businesses and their operational capabilities in various jurisdictions worldwide.
Beazley’s data shows that 67% of global executives believe that ESG regulation is too complex, while 70% want more guidance from regulators.
“With competing regulations in different jurisdictions, executives are left to decide which rules to comply with and how much risk they are willing to carry. Anti-trust rules around ESG in a number of US states creates new challenges from a directors’ and officers’ (D&O) liability perspective. And, as a result, some firms and investment funds are rolling back on public commitments around ESG,” analysts stated.
The report revealed that 22% of global executives are concerned about ESG regulation and the failure to comply with new legislation, regulation, or reporting requirements.
Beazley’s analysts also found that concern among executives around reputation risk is growing as well.
In today’s interconnected world, executives face increased scrutiny from multiple stakeholders, including shareholders, regulators, media, and the public, which subjects them to heightened accountability.
A fifth (20%) of global executives cited reputational damage, the risk of directors damaging brand value and customer trust, as their top business risk, up from 17% in 2023. This rises to 25% among executives in the financial and professional services industry.
Bethany Greenwood, CEO of Beazley Furlonge Ltd and Global Head of Specialty Risks, Beazley said: “While macroeconomic conditions appear to be stabilising, D&O risks are still front of mind for global business leaders. In the event of a company filing for bankruptcy, D&O litigation can quickly follow for executives. Amid persistent inflation and the ongoing threat of recession, this has been a key threat in recent years.
“At the same time, businesses and their executives are feeling the heat, with D&O liability extending beyond the realms of financial performance, with litigation now being brought against executives following cyberattacks, supply chain disruption and employment-related issues.”
He added: “Failure to comply with ESG regulation has proven another key flashpoint for D&O risk. Our latest report highlights how the threat landscape has fragmented and become increasingly multifaceted with executives left scrambling to protect themselves. Understanding the risks and enhancing resilience has never been more important.”
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