Managing liability and risk in a downturn

When people and organisations wish to apportion blame for the adverse effects of the downturn, directors and officers will be in the firing line. Insurance broker and risk consultant, Marsh anticipates increased litigation against company executives across Europe. According to Marsh, this makes the need for directors and officers (D&O) insurance obvious. Concerning corporate liability, some commentators are predicting ‘waves of litigation’ around the demise of prominent financial institutions. A liability ‘food chain’ may occur, with litigants moving down from banks to the organisations and individuals that advised them, as shareholders, investors and employees seek to recoup losses. Here, John Batch of Marsh’s Financial and Professional Practice (FINPRO), Roger Luxmoore-Styles from the MMC Legal Dept., Man Cheung from Marsh’s Modelling and Design Services and Praveen Sharma from Marsh’s Global Regulatory Consulting Practice, consider how an organisation sets about establishing the correct limits of liability; buy too much insurance and valuable capital is wasted; buy too little and the organisation could be hit by uninsured losses