Recent accounting and corporate fraud scandals at some of the world's largest corporations have made corporate governance a critical issue for many companies and their shareholders. With the passage of the Sarbanes-Oxley Act, executives and directors are now held personally accountable for a company's financial statements, and must certify the truthfulness and accuracy of those statements. If a corporation or its executives fails to exercise the principles of sound governance, they may face such consequences as shareholder litigation against the company, management, and board of directors as well as delisting from trading exchanges.

Under the provisions of the act, corporate board members must also address the issues of CEO compensation, board compensation, stock options, transparency, crisis management and business continuity, succession, and environmental due diligence. Penalties for non-compliance can include not only civil and criminal fines, but also prison time.  

As a result of the current climate, insurers have tightened the terms and conditions for directors and officers (D&O) policies. The most favorable coverage is restricted to corporations that can show they have sound corporate governance measures in place; specifically, companies that have undergone a board assessment performed by a third party.

For mid-size publicly traded companies, Marsh's Financial and Professional Services (FINPRO) Practice offers ExecutivePreferred, an offering that combines a board assessment with significant D&O insurance coverage enhancements and an efficient renewal process.

In addition, our Enterprise Risk Services & Solutions Practice can help companies to identify, define, and quantify the universe of risks they face, as well as provide the policies, processes, and infrastructure required to proactively treat insurable and noninsurable risks so that corporate governance objectives are being met.

Contacts:

Mat Allen
Enterprise Risk Services & Solutions (ERSS) Practice Leader
212-948-2522

Related Information

Report: New SEC Risk Management Disclosure Rule Requires Immediate Compliance

National Underwriter: New SEC Rules Require Attention To ERM, Experts Advise

Article: SEC Risk Disclosure Requirement Looms

Podcast: Marsh's Mat Allen Discusses the New SEC Disclosure Rule

Report: The Importance of Enterprise Risk Management in Times of Economic Upheaval

Solution: Enterprise Risk Management

Article: Enterprise Risk Management: A Daily Excercise

Webcast: Excellence in Risk Management

Report: What Are the Pros and Cons of Blending D&O Fiduciary Liability Programs

Report: Firms Seek More Strategic Approaches to Risk Even as Growth in Enterprise Risk Management Plateaus

Guide: How Can Directors and Officers Protect Their Personal Assets

At Risk: New Corporate Governance Rules Go Beyond Sarbanes-Oxley

Article: Desired End Result Should Dictate the Requirements of a Risk Assessment Process

Newsletter: FINPRO Insights