How Do Your Clients Manage Their Directors and Officers Liability?
As a director or officer of a business, your clients hold the authority and responsibility for the direction, activities, and operations of their company. They are obligated to use the power they have on behalf of their business, and exercise that power with competence and diligence.
With this responsibility comes risks. Your clients in this position face directors and officers liability issues every day. These can include the following:
Claims of Wrongful Acts. This can include conflicts of interest, acting beyond their authority, or even giving wrong advice or breaching their fiduciary duties. It could also include misrepresenting or being accused of misrepresenting reports and financial statements, among other risks.
Mistakes/Errors. If your client fails to give accurate reports, or gives false or misleading information, they could face a claim of error.
Claims of Financial Mismanagement. If your client authorizes excessive spending, or practices unauthorized borrowing, they may certainly face financial management allegations.
Claims of Negligence. This may include failure to supervise subordinates, to examine reports before signing, to detect or stop embezzlement of funds, and even continual absence from meetings, which shows the director or officer is avoiding their responsibility.
It’s important that your clients know what risks they face as a director or officer, but it’s even more important that they manage these risks. Risk Management is a proactive process that manages a company’s, director’s, or officer’s risks and resulting outcomes. The purpose of a solid risk management plan is to avoid, reduce, or prevent risks from imposing negative consequences.
At PLRisk Advisors, we understand the unique risks your clients face, which is why we offer comprehensive Directors and Officers Liability policies for a variety of types of businesses. Please contact us today to learn more at (855) 403-5982.