Protecting your people

Directors’ and officers’ liability insurance can go a long way to preventing loss
By Ryan Seager
|Canadian HR Reporter|Last Updated: 02/21/2017

Managing a business has become significantly more complicated for corporate directors and officers. Globalization, economic instability, increased competition and strengthened regulation, among many other factors, have all forced a new form of stress upon executives. Unfortunately, a management decision can result in an unforeseen consequence that can materially impact a company’s financial position and security — and, in certain cases, put an executive’s personal assets at risk.

In law, directors and officers are the “stewards” of a corporation, and in their capacities as such, they assume a personal financial responsibility for the decisions they make and their outcome on the business and its stakeholders. What is startling, however, is this liability is quite often misunderstood or even completely overlooked. 

In the 2013 Baker v. Ministry of the Environment, a highly publicized Canadian environmental case, the Ontario Divisional Court ruled that a group of directors must personally contribute millions of dollars to the costs associated with cleaning up contaminated land.