Why Company Directors Are Facing More Lawsuits

Investing in appropriate company directors liability insurance has always been a sign of responsible company leadership. This has become even more important in recent years, as corporate management in the United States is facing increasing scrutiny from regulatory agencies, shareholders and the general public.


Mergers and Acquisitions


Because of findings that many directors and officers failed to fulfill their fiduciary responsibilities regarding mergers and acquisitions and other types of high-level business transactions, regulators and shareholders have started to review these executives’ decisions more rigorously. These investigations have resulted in higher numbers of federal citations and shareholder derivative lawsuits.


Security Breaches


It seems that security breaches and privacy concerns are now a regular part of daily news. From Target’s information leaks to the Heartbleed bug, security issues are everywhere—and company executives and directors are the ones who must ultimately answer for them. These breaches could provide grounds for a myriad of lawsuits, which could lead to huge expenses for a company.


Regardless of the current business, economic or political climate, executive liability poses a constant threat for corporations. Any lawsuits, regardless of merit, can lead to years of expensive legal battles that can quickly drain the coffers of a company with inadequate insurance policies. To guard against this, make sure that your company carries sufficient company directors liability insurance to cover any potential litigation costs.

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