Risky business

Many TSX-listed companies are concerned about the potential for claims against directors and officers, according to a recent survey commisioned by Bishop Philips and conducted by the CIBC Centre for Corporate Governance and Risk Management at Simon Fraser University’s Segal Graduate School of Business. The study found that on a six-point scale — six is high risk — the average rating of risk of claims against directors and officers today is 3.9; respondents expect an increase. When asked about the future, the average rating on the same scale was 4.6.

The survey, including responses from 70 TSX-listed companies, also investigated the types of claims that concerned companies most. With a mean rating of 3.5 (five is high) inadequate/inaccurate disclosures topped the list. Other areas of concern included accounting and other fraud, and insider trading. All rated 2.8.

Most firms (93%) have director and officer insurance and virtually all agreed the insurance was essential to retain experienced directors. Sixteen percent of companies had notified their insurer of a threatened or actual claim during the past three years.

John Tabone is CICA's manager of innovation