Whether navigating economic uncertainty, keeping pace with shifting societal values or mounting ESG regulation, the stakes are getting higher for global boardrooms.
Executives prepare to navigate an array of reputational pitfalls
Preserving hard-won reputations and protecting shareholders’ interests in an increasingly polarised society is sending liability exposures soaring up boardroom agendas, according to our latest Spotlight On Business Risk report, based on our Risk & Resilience research.
When risks faced today could impact operations for years to come, how can executives make decisions now which their future selves, staff and stakeholders will be grateful for?
Key Findings
We surveyed 2,000 global business executives
22%
Said employer risks were the biggest challenge they faced in 2023, doubling from 11% in 2021.
36%
Plan to review hiring and retention policies to boost diversity and inclusion in the workforce.
28%
Feel unprepared to deal with reputational threats. 1 in 5 (19%) said this was the biggest risk they face right now.
91%*
Areconcerned by the persistent threat of high inflation. 31% said they operate in a high-risk environment. [1]
35%
Plan to explore insurance options that include risk and crisis management as business risks mount.
“It is vital that firms have the right flexibility in their structures to enable them to pivot and flex their operations and policies, as well as the right protections in place to manage the cocktail of risks they face.”
Bethany Greenwood Group Head of Specialty Risks, Beazley
Culture Wars
Businesses typically try to stay out of politics, but as viewpoints become polarised, staying neutral is increasingly difficult.
Boardrooms are being scrutinised for their company’s culture, as they grapple with louder calls from more confident and informed stakeholder groups – externally and, increasingly, internally. The risks posed to businesses by failing to support their staff are perceived to have doubled in the last two years alone - up to 22% this year, compared to 11% in 2021. At the same time 1 in 4 (27%) of business leaders surveyed feel ill-equipped and unprepared to deal with this risk.
It all goes back to a sound governance framework and setting the tone of the organisation from the top. If there's poor governance, poor messaging and poor behaviour from the top, that will filter down."
Letoyia Horton
Claims Focus Group Leader – Employment Practices Liability, Beazley
Winds of change
‘Economic uncertainty’ has come to define recent years, as the world’s financial system has teetered on the brink of recession since the pandemic.
As businesses are forced to keep pace with a constantly changing environment, or risk falling behind, economic uncertainty continues to rise up boardroom agendas. economic uncertainty continues to rise up boardroom agendas. rise up boardroom agendas.
Firms need to prepare so that they can switch lanes quickly if needs be, and remain agile. By remaining agile, boardrooms can avoid mistakes and be able to navigate emerging risks."
Wayne Imrie
Head of London Market Wholesale Executive Risks, Specialty Risks, Beazley
Greenwashing or Good Governance?
Global regulators are tightening environmental, social and governance (ESG) related laws. Ever-increasing attention is being paid by business leaders to this raft of new legislation as they look to keep up, but the challenges faced can vary wildly between jurisdictions. The cost of compliance is keeping business up at night as ESG risk tops their concerns.
"There is no one size fits all approach to dealing with ESG regulation. This has had a significant impact on multinational businesses and can be seen as a barrier to international expansion."
Moussa Thiam Head of Cross-Border General Management, Beazley
Next Steps
Almost half (42%) of global business leaders we surveyed believe they will be operating in a high-risk environment in six months’ time, up from 31% now. Over a third (35%) of global executives now plan to explore insurance options that include risk and crisis management as business challenges mount.
The role of the specialty insurance market will be vital to help businesses navigate choppy waters and to share liabilities that may not manifest for months or years to come, but, when they do, they often rear their head as costly Directors’ & Officers’ (D&O) liability risks.
[1] *(Net figure. It is the product of 44% of respondents feeling ‘slightly concerned’, 28% feeling ‘moderately concerned’ and 19% feeling ‘very concerned’.)
It all goes back to a sound governance framework and setting the tone of the organisation from the top. If there's poor governance, poor messaging and poor behaviour from the top, that will filter down."
