The liability environment for board members, managing directors and supervisory board members is becoming more dynamic and complex than ever before. Companies worldwide find themselves caught between geopolitical uncertainties, economic pressures, technological upheavals and growing social pressure. In this situation, it is not only organisations as a whole that are coming under scrutiny from regulatory authorities, shareholders, supervisory bodies and the public, but increasingly also the individuals involved. The new Allianz report on directors and officers (D&O) risks for 2025/2026 impressively shows how much the risk landscape has changed, which drivers are particularly relevant and which challenges executives will have to master in the future. D&O insurance, once intended primarily as protection against classic management errors, has developed into a central instrument of modern corporate governance and stands at the interface between strategic management, regulatory responsibility and technological change.
Geopolitical developments are now at the top of the agenda for many companies. Conflicts, political instability, trade disputes and sanctions have far-reaching consequences for global business models. Whereas economic indicators used to be the main focus, today geopolitical ‘shock waves’ determine operational challenges, regulatory realignments and reputational risks. The report makes it clear that executives can increasingly be held liable if they misjudge the impact of geopolitical changes, fail to comply with sanctions regimes or implement regulatory adjustments in key markets too late. In a world where global competition and political realignments are closely intertwined, a web of risks is emerging that challenges D&Os in a whole new way. Wrong decisions can quickly lead to shareholder lawsuits, regulatory action or international litigation. Geopolitical intelligence and systematic monitoring of global hotspots are therefore no longer just an option, but a fundamental part of modern strategic leadership.
Parallel to geopolitical risks, challenges in the area of cyber security are also growing. In recent years, cyber risks have rapidly become one of the most common triggers for D&O claims. With a significant increase in data breaches, ransomware attacks and technical disruptions, pressure is mounting on management to establish robust cyber risk management. The Allianz report shows that board members and senior executives can increasingly be held liable for failures to adequately address cyber threats. This is particularly relevant in the context of legal requirements such as the European NIS2 Directive, which not only calls for stricter security standards, but also emphasises the personal responsibility of D&Os for monitoring a company’s cybersecurity and its ability to respond to cyber incidents. The threshold for lawsuits is falling, while the willingness to assert claims is increasing among both shareholders and regulatory authorities. Even if executives are not directly responsible, cyber incidents often result in high defence and investigation costs, which further increase the risk. The report emphasises that investments in cyber defence, business continuity management and data protection not only promote operational resilience, but are also crucial for preventing liability-related situations.
Another focus of the Allianz report is on the rapidly growing risk areas of artificial intelligence (AI). The global AI market is set to multiply in the coming years, while at the same time the likelihood of liability-related events is increasing. AI systems promise efficiency gains, new business models and innovation boosts, but they also pose significant legal and regulatory challenges. The report points out that the number of AI-related lawsuits – particularly in the area of securities class actions – has increased significantly. Shareholders and regulatory authorities are closely monitoring whether companies are correctly assessing AI risks, whether performance promises are realistic, and whether so-called ‘AI washing’ is taking place, i.e. exaggerated or misleading representations of capabilities and opportunities. Faulty models, algorithmic biases, data breaches or incorrect disclosures can lead to significant share price losses – and thus to direct liability claims against D&Os. For executives, this means that the integration of AI is not only a technological project, but also a governance issue with significant disclosure and compliance requirements.
In addition to technology and geopolitics, environmental and product liability issues are also playing an increasingly important role, particularly in connection with per- and polyfluoroalkyl substances (PFAS), known as ‘forever chemicals’. These persistent substances, which have been used in numerous products since the 1940s, are now the subject of extensive international litigation. As PFAS are associated with health and environmental problems, they give rise to significant liability risks. The Allianz report points out that costs of over 100 billion US dollars are possible in the USA alone. D&Os are liable if risks are not identified or are insufficiently disclosed. Shareholders are increasingly accusing board members of communicating potential environmental or product risks too late or misjudging them. This can be particularly relevant when negative news leads to share price declines and liability claims are made. The report emphasises that companies must recognise new risks on the horizon at an early stage and communicate them transparently. Failure to disclose or delayed disclosure is increasingly becoming the basis for financial claims against executives.
Private companies are now also among the main causes of and parties affected by D&O risks. Rising costs, volatile markets, new regulatory requirements and the pressure of digital transformation are placing a considerable burden on those responsible. Trade and customs risks in particular, as well as geopolitical influences, are causing private companies considerable concern. If companies misjudge the impact of tariffs, provide incorrect information or fail to communicate price transfers transparently, this can lead to regulatory investigations, civil lawsuits or allegations of breach of fiduciary duty. The report therefore recommends that private companies invest more in scenario planning and systematically analyse risks in supply chains and tariff-related dependencies. A robust governance structure, clear documentation and proactive risk communication are crucial to avoiding liability claims.
In addition, there has been a significant increase in global insolvencies. According to forecasts, global corporate insolvencies are expected to rise by 6% in 2025 and by a further 5% in 2026, marking five consecutive years of growth. However, the growing number of so-called ‘mega insolvencies’ involving companies with assets in excess of one billion US dollars is particularly critical. This significantly increases the risk for D&Os: as soon as a company gets into financial difficulties, fiduciary duties are expanded and every decision is subject to the strictest ex-post evaluation by authorities, creditors and insolvency administrators. Poor documentation, delayed responses or internal conflicts of interest can lead to substantial liability claims. Even the mere suspicion of financial difficulties can trigger legal disputes as stakeholders attempt to protect their own interests. The report makes it clear that executives should act with particular care in the run-up to a possible insolvency, document their decision-making processes and seek legal advice at an early stage.
Overall, the Allianz analysis shows that the number of D&O claims worldwide has been rising steadily for three years and has now returned to – or even exceeded – pre-pandemic levels. While North America continues to lead in terms of the severity of claims, the willingness to file claims and the complexity of proceedings are also increasing significantly in Europe and Asia. The combination of geopolitical uncertainty, cyber risks, AI-related litigation, environmental proceedings and economic instability creates a risk landscape that places considerable demands on executives and places high demands on governance, compliance and strategic risk management.
The Allianz report thus makes it clear that 2026 will be a key year for D&O liability and corporate governance. Risks are increasingly arising from external shocks, technological missteps and regulatory changes – rather than from classic bad decisions. Companies must adapt their governance and risk structures, strengthen their monitoring systems and expand the competencies of their management bodies. It is equally important to identify potential stress scenarios at an early stage and to align internal processes in such a way that transparency and accountability are guaranteed. D&O insurance thus becomes not only an essential protective mechanism, but also a strategic companion that provides impetus for professional management and sustainable risk control.
