Directors and Officers Liability Assessment

Assessment Introduction

Page 1

Welcome to the Directors and Officers Liability IQRM!

Directors and Officers (D&O’s) have responsibilities by law to the corporations they serve, whether publicly traded, privately owned or not-for-profit. D&O’s of publicly traded corporations are primarily at risk for alleged violations of federal securities laws such as the SEC Act of 1933 & 1934, Sarbanes Oxley, and other federal, and state securities laws. These exposures are significant, well documented and a topic for a separate analysis. Perhaps less clear are the exposures faced by D&O’s of private corporations (and not-for-profit organizations).

Please click below to begin a 20 statement survey to gain your organization’s IQRM Effectiveness Risk Audit Score for Directors and Officers Liability. 

Question 1

To what degree do your organization’s directors refrain from usurping business opportunities which the corporation is financially able to exploit?

Question 2

To what extent have all directors disclosed to the board, in writing, all potential conflicts of interest and given detailed disclosures for actual conflicts of interest?

Question 3

How effective is your organization at putting quality control procedures and policies in place?

Question 4

To what extent do your board members review written descriptions of each position’s responsibilities?

Question 5

To what degree does your organization’s board fully document the business reason for  taking action that could adversely affect a minority of shareholders?

Question 6

If the board is defending against a hostile takeover, how effective is your board at fully documenting the business reasons for the actions?

Question 7

How would you rate your board’s ability to appoint a special litigation committee to ensure you resolve a shareholder demand without litigation successfully? 

Question 8

To what extent does your board consult closely with an attorney if the corporation is near insolvency or if its authority has been suspended?

Question 9

If in bankruptcy, how effective is your board at continuing the due diligence or the winding up process and at continuing to document the business reasons for all decisions?

Question 10

How would you rate your directors at avoiding personal guaranties whenever possible?

Question 11

To what extent are your directors accurate in written representations to customers, competitors, and government agencies, retaining experts for advice before completing the documents?

Question 12

If the business provides customers high-exposure advice, how effective is your board at documenting all verbal warnings to the customer?

Question 13

To what degree does your organization consult closely with counsel when making decisions affecting employee benefits?

Question 14

If allowed by state law, to what extent will your board request shield and indemnification provisions in the articles of incorporation and bylaws for both directors and officers?

Question 15

How effective is your organization at obtaining Directors and Officers Liability Insurance?

Question 16

To what extent will board members be individually polled when completing warranty statements on insurance applications?

Question 17

If allowed by state law, to what degree does the board request shield and indemnification provisions in the articles of incorporation and bylaws for both directors and officers?

Question 18

How would you rate your organization’s review of the D&O and other liability policies with your organization’s insurance agent or broker to ensure maximum limits and coverage for internal claims?

Question 19

How effective is your board at promptly notifying counsel and insurers of outsider complaints that may lead to litigation when appropriate?

Question 20

To what degree does your organization ask in-house or outside counsel to provide a periodic “preventive maintenance” review of claim-prevention procedures?

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