Navigating the D&O insurance landscape for financial institutions

Navigating the D&O insurance landscape for financial institutions | Insurance Business Canada

Insurance News

Navigating the D&O insurance landscape for financial institutions

Expert shares her views on challenges and a new set of risks impacting organizations

Insurance News

By
Mika Pangilinan

The landscape of directors and officers (D&O) insurance for financial institutions has undergone significant transformations, extending far beyond the impact of the COVID-19 pandemic.

Factors such as cyber risks, regulatory compliance, and emerging liabilities have become critical considerations for brokers seeking effective insurance solutions for their clients.

In a recent episode of IB Talk, Abena Apraku, assistant vice president, underwriting management liability and specialty lines at CNA Canada, shed light on the challenges faced by financial institutions.

These challenges include increased stress on loan portfolios as interest rates rise, uncertainties in real estate markets, the need for digital transformation to adapt to hybrid work arrangements, supply chain shortages, regulatory changes, and the growing demand for sustainable investment products and adherence to ESG standards.

With cyber threats becoming increasingly prevalent, financial institutions are also being confronted with a new set of risks directly impacting D&O liability.

“Directors and officers are facing greater exposure to claims related to data breaches, network security failures and inadequate cyber risk management,” Apraku said.

She explained that shareholders, customers, and stakeholders may hold directors and officers accountable for failing to implement effective cybersecurity measures.

Despite the intimidating nature of cyber risks, Apraku noted several ways to mitigate these risks.

Financial institutions must prioritize cybersecurity and establish robust risk management practices, such as implementing comprehensive cybersecurity policies, conducting regular risk assessments, and investing in appropriate technological safeguards.

Ongoing employee training and awareness programs can also promote a “culture of cybersecurity,” according to Apraku.

“By staying up to date with emerging cyber threats, leveraging industry best practices and engaging with cybersecurity experts, financial institutions can improve their preparedness and reduce the likelihood of cyber related management liability claims,” Apraku said.