risk management - Director Magazine

UP CLOSE RUNNING AND HEAD PERSONAL
The lesson here? Try to pick good advisers obviously but, above all, keep records
of their advice, and full minutes of every meeting and board decision.
you’re not alone
Directors, of course, can make some safeguards against the costs and distress
of stumbling in one of their duties. The Companies (Audit, Investigations and
Community Enterprise) Act 2004 changed the rules on how companies can help
directors defend themselves.
From April 2005 it relaxed many prohibitions on companies indemnifying
directors against liability and has allowed companies to pay defence costs as
they are incurred, regardless of the outcome of the case.
The other option is to buy commercial directors’ and officers’ insurance. Such
D&O cover is designed to pay towards defending directors from actions
against them.
Each policy is different and your broker can help tailor the right package for you.
Both the board collectively and directors thinking of their own position should
make time to read the details of any proposed insurance carefully. Check who is
covered, for what roles and duties, whether joint venture projects are included,
how long cover extends after a director has resigned and how quickly it comes
into force where the business makes an acquisition.
Insurance is usually a wise option – indeed, best practice on corporate
governance recommends it – but it is not a panacea.
risks to you and your lifestyle
There is another type of risk that is all too easily overlooked. Directors are human
beings too, with all the usual physical frailties and emotional needs. Only you can
look after these needs by:
making time for regular health checks
getting away from the desk. In this era of mobile phones, laptops and
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