The set of risks any director faces are unique. Some will be dependent on the nature of the business and their approach to risk taking but others come down to the broader market and economic environment.

These broader market conditions change too, with new risks and potential liabilities emerging. A good example of this is the way the world has changed post-pandemic. As normality returned, demand for goods soared, resulting in rising prices and inflation but also supply chain issues as manufacturers struggled to get their products to market.

Risk management activities such as reviewing the supply chain and assessing ESG practices, can help reduce some of these risks but insurance also has an important role to play.

Directors and Officers insurance (D&O) provides personal liability cover for company directors which can protect them from claims that may arise from the decisions and actions they take. Policies can also include cover for the business if claims are brought against it rather than individuals.

Although many people believe D&O insurance is only needed for larger, multinational companies, smaller companies have their own exposure too.

The UK D&O market has been challenging since 2020 but there are signs that it is becoming more competitive again, with rates beginning to soften. Some of this may be down to insurers looking to strengthen their D&O books after they were impacted during the pandemic.

But there is still caution. As well as facing a lot of risk due to macroeconomic issues which could lead to an uptick in claims, inflation means that claimants are likely to seek larger settlements.

This has prompted more discussions around risk management and how directors can protect themselves and their businesses during this time.