An analysis of the most pressing concerns based on insights from 1,000 UK business leaders.
Author: Laura Parris
The risk landscape in 2025 presents a complex mix of regulatory shifts and ongoing economic uncertainty, which demand a proactive approach from firms and their senior leadership.
Directors are under increasing pressure from reforms in employment law, shifting ESG obligations, the persistent and growing threat of cyber-attacks, and the complexities of an ever-evolving regulatory landscape among other things.
Added to this, firms continue to contend with macroeconomic challenges while insolvencies and corporate restructures remain potential sources of claims moving forward.
The long-tail nature of Directors’ & Officers’ (D&O) claims often span years and involve complex investigations, meaning comprehensive insurance coverage is critical.
Employment law: Firms and their directors grapple with new responsibilities
New employment law reforms designed to strengthen employee rights will be a key issue for directors in the coming year.
If enacted, the Employment Rights Bill introduced in 2024 could bring significant changes to UK employment law, including ending zero-hour contracts and ‘fire and rehire’ practices. Employees would gain protection from unfair dismissal from day one of employment, strengthening their job security. The onus will be on directors to update HR policies to meet the new standards, including enhanced rights to parental leave and flexible working.
Meanwhile, the Worker Protection (Amendment of Equality Act 2010) Act mandates employers take more active measures against sexual harassment, shifting from reactive to preventative responsibilities. Their duty extends to preventing harassment by third parties and requires a thorough review of company policies and training.
To mitigate these risks, companies should conduct detailed risk assessments and update their compliance protocols to ensure they have the right measures in place. Directors should aim to strengthen governance and control frameworks to ensure oversight aligns with the new regulations. Non-compliance could result in significant financial and reputational consequences.
ESG frameworks present both risks and opportunities
ESG considerations are now an established framework, with 62% of firms stating that ESG-related risk, regulatory, and compliance considerations are an important factor in senior decision-making1.
In addition to their responsibility for corporate governance, directors should demonstrate they have put in place the necessary controls, policies and procedures around social and environmental risks.
The benefits of prioritising ESG are becoming more widely accepted, with metrics around ESG increasingly being factored into underwriting decisions .
From an insurance underwriting perspective, firms that exhibit strong ESG policies and a commitment to responsible practices are more attractive candidates and, as such, likely to receive enhanced coverage terms.
On the other hand, firms seen as failing to ‘walk the talk’ are increasingly being taken to task. Shareholder activism, the rise of litigation funding and a focus on greenwashing are among the loss trends to watch.
Greenwashing claims, where companies are accused of exaggerating their environmental credentials, are becoming more common, as are lawsuits related to social accountability, including modern slavery and Diversity, Equity & Inclusion (DE&I).
Regulators are increasing their scrutiny of firms that make misleading statements around ESG. In July 2024, the FCA's
Cybersecurity will remain an ongoing priority
Cyber risk remains an essential focus as businesses become more digitally integrated. Directors are accountable for ensuring adequate cybersecurity measures are in place and that sensitive data is protected.
Companies that haven't sufficiently invested in their cybersecurity measures may face significant risk from data breaches, ransomware and other cyber-attacks.
The good news for buyers of D&O cover is that it is a good time for companies to reassess their limits of liability and consider taking out broader coverage to offer essential balance sheet protection in a more challenging risk environment.
For directors, staying engaged with evolving challenges — whether regulatory, technological or economic — will be key to navigating 2025 with resilience and confidence.
