At the top of increasing concerns for directors and officers around the globe are economic, geopolitical and cyber risks, according to the latest Directors and Officers Liability 2023 Survey released by Willis Towers Watson (WTW) and Clyde & Co, a global law firm.

“With companies and their leaders operating in an almost unprecedented climate of uncertainty, this year’s survey provides timely and valuable insights into the evolving risk landscape,” said James Cooper, partner, head of insurance, Clyde & Co. “We asked directors about 28 risks overall; the results are very consistent with last year, with cyber risks ranking significantly above other risks. There have been developments, however, with notable new risks including systems and controls, sufficient cyber expertise at board level, and employee crime and cyber crime as a subset of crime risks.”

The report highlights key risks for directors across the world (including the UK, Europe, Asia, Australasia, Latin America and North America), offering responses from 40 countries. Responses varied by country, with the greatest number coming from Europe at 37 percent, followed by Great Britain at 24 percent, and Latin American at 13 percent. Africa posted the lowest responses at 1 percent.

Economic risk topped risk concerns for businesses by 63 percent of global directors, closely followed by cyber risk on 62 percent. Geopolitical risk moved up the ranks of concern, placing 4th on the list, up from the 6th spot last year.

“With a volatile business environment resulting from the current geopolitical uncertainty, it is no surprise that geopolitical risk is rising on the list of directors’ concerns,” said Jeremy Wall, head of global FINEX, WTW. “The advent of technology ensures that cyber will continue to be of major concern and we are certainly seeing more demand for cyber insurance as a result.”

This year’s survey results are consistent with 2022, with cyber, data loss and cyber extortion dominating the highest ranks of risks for directors. In percentage terms, cyber attacks and data loss are still the most significant with 62 percent of directors concerned.

While COVID-19 and Brexit concerns remain in the top five, D&O responses indicate the two risks continue to decrease in importance.

Response analysis was then broken up by industry, region and revenue, and for the first time, the survey also broke down economic risk into three perils—inflation, recession and the job market, with most global directors citing inflation as the biggest economic risk (69 percent), closely followed by recession (67 percent).

Focusing on the finance and insurance industry, the top risk concerns of directors and officers in 2023 are:

1. Cyber attack
2. Data loss
3. Cyber crime
4. Cyber extortion
5. Bribery and corruption
6. Regulatory breach
7. Breach of sanctions

Geopolitical risk ranks highly for businesses in Europe, Asia and Latin America.

A fluctuating concern is climate change; it ranked as the No. 1 risk concern for directors in the energy and utilities sector, while it made it in the top five risk concerns for directors in Great Britain (where it is the No. 1 risk) and Australasia (where it is No. 4).

By region, top D&O concerns within North American companies in 2023 are:

1. Cyber attack
2. Data loss
3. Cyber extortion
4. Cyber crime
5. Sufficient cyber expertise at board level
6. Regulatory breach
7. Systems and control

Risk concerns stayed relatively consistent across revenue categories, the report found. Cyber-related concerns round out the top three, and sometimes, more lists for all revenue categories.

Additional interesting takeaways include the finding that 19 percent of respondents were not aware of the extent of their indemnification and a significant number of respondents indicated insurance premiums had increased from the previous year.

“While the survey highlights geographical variations, it also sheds light on marked differences between how directors and risk managers at small companies are rating risk compared to those at large enterprises,” said Cooper. “But regardless of business size, successfully navigating risk has never been more difficult. Directors need a forward-looking view to anticipate threats and challenges.”