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Artificial intelligence is the most significant risk to businesses globally, according to directors

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Page Joanna
Joanna Page

Partner

London

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Dewar Sally
Sally Dewar

CEO, A&O Consulting

London

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10 December 2019

When asked about global risks affecting their businesses, nearly three fifths (58%) of directors stated that technological advances (artificial intelligence and machine learning) are the most significant threat. This is according to the seventh annual Directors’ Liability report by international law firm Allen & Overy, in conjunction with Willis Towers Watson (NASDAQ: WLTW), the global risk advisory and insurance broker.

The survey found that: 

  • More than half (54%) of the respondents reported a direct experience of either a significant cyber-attack or sizeable data loss in the past 12 months which is up from 44% last year;
  • 83% of respondents believe they understand their organisation’s corporate culture but worryingly only 59% of business leaders believe they can change it, with this figure rising to 67% in listed companies; 
  • 49% of respondents have experienced a criminal or regulatory claim involving leaders of their company in the last 12 months (compared to 27% in 2016 and 2017, and 34% in 2018);
  • 40% of respondents felt that climate change was a significant risk for their business.

Joanna Page, Head of A&O’s Insurance Litigation group commented: “Cyber threats, whether in the shape of artificial intelligence or data protection, continue to trouble directors globally more than any other risk. Add to this the increasing importance of getting your corporate culture right – which is rightly a key focus for  regulators and a growing awareness of climate change as a potential area of liability, and our survey points to the three “Cs” - cyber, culture and climate change - creating an environment of heightened anxiety and exposure for directors.”

Sally Dewar, CEO of A&O Consulting commented: “The number of enforcement investigations by the UK’s FCA into issues relating to culture and governance has increased by 1,066 per cent in the last three years, showing a continued focus by regulators on using corporate culture to tackle conduct issues. This will be a challenge for directors who don’t feel they can change their corporate culture but may find themselves liable if it is found wanting.”

Francis Kean, Executive Director, Willis Towers Watson: “I am particularly struck by the fact that this year, for the first time, the top priority for directors when it comes to liability insurance is understanding how their claims will be handled. This shows a heightened awareness of the fact that D&O insurance protection may need to be called upon in practice and is entirely consistent with the increasingly hostile claims environment.” 

For further information, please contact Antoinette Willcocks, Antoinette.willcocks@allenovery.com, on 020 3088 4638.