Geopolitical instability climbs up boards’ risk agenda
International uncertainty is becoming a permanent feature of boardroom discussions. According to the Global Directors’ & Officers’ Liability Insurance Survey conducted by WTW and Reed Smith, nearly six in ten executives now rank geopolitical tensions among the most significant risks facing directors and officers. It is the first time the issue has entered the top seven concerns, with awareness particularly pronounced among European companies and mid-sized businesses.
Traditional risks, however, continue to dominate the rankings. Health and safety concerns were cited by 77% of respondents, followed by data loss (76%) and cyber attacks (75%), leaving the top three largely unchanged from last year.
According to the report, the growing prominence of geopolitical issues reflects boards’ efforts to navigate an increasingly unstable global environment without jeopardising growth and profitability. For insurers, he noted, assessing the effectiveness of companies’ governance frameworks and risk management controls is becoming equally critical.
Artificial intelligence remains another area attracting close scrutiny. Although it did not make the top seven, 56% of respondents described AI-related risks as highly significant. The chief concerns are AI-generated errors and misinformation, identified by half of those surveyed, followed by AI-enabled fraud and social engineering attacks (40%). More than one-third also fear that failing to adopt the technology quickly enough could result in a competitive disadvantage.
By contrast, only 15% of respondents viewed exaggerated claims about AI capabilities as a major risk, which appears at odds with recent litigation trends in the US, where lawsuits linked to corporate disclosures on AI applications and expected financial benefits are becoming increasingly common.
The survey also points to growing concern around operational resilience. Nearly four in ten respondents identified greater exposure across supply chains and third-party relationships as the most significant vulnerability. Resource constraints and limited cross-functional coordination followed at 18%, while a lack of adequate data and technology capabilities was cited by 17%.
The regulatory environment is adding further pressure on boards. Frameworks such as DORA and CSRD, for example, are driving more stringent control mechanisms and increasing directors’ accountability. As a result, operational resilience, data quality and the reliability of corporate reporting are becoming increasingly important areas of focus.
