Managing a world of risk — and D&O programs — from a single boardroom
Key takeaways:
Geopolitical events often create D&O exposure not only through business disruption but through governance, oversight, disclosure, and communication challenges that can affect both public and private companies.
D&O underwriters are increasingly evaluating governance, communication, and risk management practices alongside traditional exposures.
Multinational organizations should ensure their D&O programs account for local differences in regulation, claims handling, individual director protections, and coverage.
Tariffs, trade disputes, regional conflicts, sanctions, cyber threats, and shifting regulatory environments have made geopolitical risk a permanent boardroom concern. But for directors and officers, the greatest exposure often stems not from the event itself, but from how organizations identify, govern, communicate, and respond to emerging risks.
As scrutiny from regulators, stakeholders, and directors and officers liability (D&O) insurers increases, multinationals must demonstrate that these risks are actively monitored and managed.
Board members at risk
Over the past decade, cyber incidents, the COVID-19 pandemic, social and political movements like Black Lives Matter and #MeToo, and artificial intelligence (AI) have all generated litigation, regulatory enforcement, and shareholder scrutiny. In D&O insurance and legal circles, this trend has come to be known as event-driven securities litigation. And geopolitical risk is the latest event to spur claims.
While today's headlines focus on tariffs, regional conflicts, sanctions, and supply chain disruptions, these events rarely create liabilities on their own. Instead, they can expose weaknesses in governance, oversight, disclosures, and decision-making.
Consider companies facing supply chain disruptions related to tariffs, cyber incidents linked to state-sponsored actors, asset impairments tied to overseas operations, or regulatory changes in foreign jurisdictions. The resulting exposures for senior leaders often stem from what follows:
Did leadership understand the risks?
Were contingency plans considered?
Did the company timely disclose and accurately communicate the potential impact on financial performance?
Were regulatory obligations satisfied?
These situations may develop into securities litigation or shareholder derivative actions against public companies, or regulatory investigations that directly impact public and private companies alike.
Many of these triggers are interconnected; recent securities suits, for example, have combined geopolitical and AI-related disclosure theories in a single complaint. Regulators, meanwhile, continue to focus on issues such as sanctions compliance, cybersecurity oversight, disclosure practices, internal controls, and other areas where geopolitical developments may affect both public and private organizations.
No one-size-fits-all approach to governance
Many companies respond well once something has gone wrong, through business continuity and alternative-vendor strategies. But effective governance allows for earlier intervention and supports a more proactive approach to risk management: By establishing visibility, accountability, and escalation processes, a company can address a developing situation before it becomes a business disruption, disclosure issue, or liability event.
Organizations may look for a specific model for governing geopolitical risk, but in practice, there is no single approach. Some boards use dedicated committees, while others incorporate oversight into broader enterprise risk management, compliance, legal, or operational structures. What matters most is effective communication, escalation, and decision-making that fit within the contours of the business.
For multinationals, risks often emerge locally but create global, enterprise-wide consequences. Leadership therefore needs confidence that significant developments can move efficiently from local operations to the executive suite. Leaders of organizations that navigate these exposures effectively often start by asking a common set of questions:
How are geopolitical risks identified and monitored?
Who is responsible for tracking emerging developments, and how are material changes evaluated?How are local developments escalated to leadership?
Companies should have reliable processes to ensure significant developments reach the appropriate decision-makers.Do we have visibility into changes in vendors/supply chains, customers, sanctions, legal requirements, and business relationships?
Geopolitical risks often emerge indirectly through suppliers, customers, business partners, and shifting regulatory regimes. Sanctions screening and broader “sanctions hygiene” can help reduce disruptions and potential claims.Who owns geopolitical risk oversight?
While legal, compliance, finance, operations, procurement, risk management, and executive leadership all have a role to play, accountability should be clearly defined.
Evolving underwriting conversations As geopolitical developments increasingly drive claims activity, D&O insurers are devoting greater attention to governance practices, oversight structures, and risk management processes. Underwriters want an understanding that goes beyond a recitation of the company's exposures — they also want to know how leadership evaluates and manages those exposures.
Among other areas, underwriters are applying scrutiny to:
Supply chain resilience
Cybersecurity governance
Board oversight of emerging risks
International operations
Regulatory compliance
Disclosure controls
Risk escalation processes
A common assumption is that underwriters are primarily concerned with outcomes. In reality, they also focus on process: Can company leadership demonstrate that it has considered these issues? Is there a mechanism for identifying risks? Are responsibilities clearly defined? Are significant developments communicated appropriately across the organization?
The strongest underwriting presentations anticipate these questions and demonstrate that governance structures are active, evolving, and aligned with an organization’s global risk profile.
Building robust insurance programs
Governance and risk management are critical, but organizations should also evaluate whether their insurance programs meet their global risk needs.
For multinational companies, that evaluation starts with understanding the relationship between global risks and local obligations. Board structures, regulatory expectations, and D&O exposures can vary significantly across jurisdictions, as can coverage: Some local insurance policies offer broader individual protection than is typical in the U.S., U.K., Singapore, or other common jurisdictions from which a global D&O policy may be issued.
A program that appears comprehensive from headquarters may actually leave critical gaps at the local level that are not always obvious. As an example, conduct that is considered a fiduciary breach in one country may be seen as a tax matter, vendor dispute, or professional liability claim in others.
Organizations should continually assess whether:
Global and local limits and coverages are aligned with exposures.
Local policies address jurisdiction-specific requirements and nuances.
Side A and Side C protections are appropriate and aligned with a business’s intentions.
International operations are supported by coordinated global and local insurance solutions.
Organizations should also evaluate the expertise and resources of their insurance advisors. In an increasingly complex geopolitical environment, experienced insurance brokers can help organizations understand local regulatory environments, identify potential coverage gaps, prepare for underwriting discussions, coordinate multinational programs, and monitor emerging developments.
The most effective advisors combine global reach with local knowledge and the ability to bridge gaps between the two. Look for a broker that can help you understand how to remain compliant, secure effective coverage, and manage geopolitical risks through sound governance, liability management, and insurance decision-making.
