This article was first published in Commercial Risk
The current global poly-crisis, marked by economic volatility, geopolitical tensions, regulatory change, and social transformation, is fundamentally reshaping the risk landscape for companies and their leadership.
For boards and senior executives, inflationary pressures, fluctuating interest rates and rapidly evolving regulatory frameworks are increasing financial and compliance risks, while shifting societal expectations are intensifying scrutiny around corporate behaviour, ESG commitments, and stakeholder trust.
In response, boards are adopting more agile and resilient strategies. Many are diversifying into new markets, products, or services, reassessing supply chains, and accelerating digital transformation. While these strategic adjustments are essential for long-term resilience, they also expand the scope of directors’ and officers’ (D&O) responsibilities, heighten risk and increase their personal exposure.
Strategic agility and rising personal liability
Major strategic shifts often increase governance and liability risks. Mergers and acquisitions (M&A), international expansion, restructuring, or entry into regulated or unfamiliar markets introduce new legal, operational, and regulatory challenges.
Even where decisions are taken in good faith and supported by the business judgment rule, directors and officers remain subject to fiduciary duties of care, loyalty, and oversight. In today’s environment, decisions made under pressure are more likely to be scrutinised, particularly if outcomes fall short of expectations.
A more proactive management style can also heighten internal frictions and stakeholder challenges. Disagreements among board members, activist pressure, employee disputes, or regulatory investigations can give rise to claims alleging management wrongful acts. In that context, claims against individual directors continue to represent a notable area of growth in the D&O market, especially in territories like France.
At the same time, the consequences of adverse outcomes have become more severe. Poor performance, financial difficulties, or insolvency can quickly lead to proceedings where corporate indemnification is unavailable or restricted, placing directors’ and officers’ personal assets at risk.
Side A and Side A DIC protection
Side A and Side A DIC (Difference in Conditions) coverage are essential tools for protecting directors and officers as personal liability risks continue to increase.
With greater regulatory scrutiny and rising claims alleging management wrongful acts against individuals, Side A remains a critical element of D&O programmes in France and across Europe.
Side A DIC strengthens this protection by providing dedicated excess and gap-filling coverage above the traditional Side ABC programme. It can respond when underlying limits are exhausted, when coverage is sub-limited or unavailable, or when the primary insurer fails to respond. With broader terms, Side A DIC can “drop down” to cover claims from ABC policies and represent an additional buffer for individual D&Os.
Together, these covers ensure directors and officers are not left personally exposed due to erosion or deficiencies in the main D&O programme, offering enhanced certainty and peace of mind for individuals operating in an increasingly complex and regulated environment.
Responding to evolving demand
The evolving risk environment is prompting boards to reassess how individual exposure is addressed within D&O programmes.
As organisations pursue greater strategic flexibility, Side A and Side A DIC are increasingly viewed as integral components of a well-structured programme, particularly relevant for organisations facing regulatory change, undertaking M&A, or expanding into new markets. This is reflecting an increasing recognition of the importance of dedicated individual protection, and a broader shift towards more robust, future-proofed cover for directors and officers.
In response to this evolving landscape, Arch is active in underwriting complex, higher-exposure risks, tailoring coverage to reflect the underlying governance, financial, and regulatory environment. An emphasis on timely engagement allows brokers and clients to obtain early indications of coverage direction, supporting efficient, bespoke programme design even where information is still developing.
A local presence is key to building the depth of understanding necessary to develop fully aligned coverage, and this is reflected in Arch’s underwriting and claims decisions being supported by on-the-ground teams in France. This local expertise enables efficient handling while maintaining consistency across the policy lifecycle and is further strengthened by experience across a range of complex risk profiles, including listed entities and regulated financial institutions.
The ability to provide multi-line coverage can also be critical to achieving a consistent programme structure, creating strong alignment of coverage across different exposures. With established capabilities across D&O, cyber, and casualty, Arch’s integrated approach to interconnected liability risks supports a deeper understanding of risk, delivering more resilient and responsive coverage, and helping ensure consistency of coverage structure.
As organisations pursue greater strategic agility in an uncertain environment, the personal exposure of directors and officers continues to rise. Aligning governance practices with a robust, well-structured D&O insurance programme provides a critical safeguard to ensure leaders can make decisive action without undue concern for financial consequences.