While the digital transformation of the 21st century has allowed businesses to more easily reach customers and streamline their operations, it has also brought a new variety of business risks to many organizations and their leaders.

In today's world, it is no longer enough to simply transfer and mitigate the risks to key stakeholders whose decisions and oversights are more easily scrutinized online and can lead to more far-reaching and public risk.

Traditional directors & officers insurance coverage protects executive leadership in the event of personal litigation or lawsuits. However, certain insurance coverages can help leaders react and recover more quickly to digital risks by combining the power of scanning technology, real-time data analysis, and comprehensive insurance coverage to create something more responsive to today's digital environment.

Here are six risks D&O clients are facing in 2022:

1) Transactional risk. All too often, directors and officers on both sides of a merger or acquisition are unaware of the new level of risk they face. During the deal, leadership needs to ensure there are no conflicts of interest or personal motivations that could lead to litigation. Are the directors and officers acting on a reasonably informed basis and in the best interests of the shareholders and corporation?

As an agent, you understand that a company's policy may go into runoff at the time of the merger or change of control. However, all too often you aren't notified of the merger and your client unknowingly moves forward without coverage, leaving the directors and officers extremely vulnerable.

2) Cyber risk and data breaches. Long gone are the days when cyber breaches were only a threat to massive corporations and technology companies. Each year, the number of data breaches increases and 2021 was no different, exceeding 2020 by over 17%, according to Identity Theft Resource Center (ITRC). Now, smaller organizations are at risk too, especially in a post-COVID-19 environment where many were forced to quickly transition to digital operations.

An organization's cyber risk management and response program is now an enterprise-wide responsibility, depending heavily on leadership to establish cybersecurity as a top priority.

3) Hiringand retention risk. In 2021, an average 3.9 million workers quit their jobs each month, with a record-breaking 4.5 million in November 2021, according the the Department of Labor. Recognized as the Great Resignation brought on by the pandemic and shifting priorities among the workforce, this turnover has motivated many organizations to better track employee sentiment. A company's remaining workforce also looks quite different than it did two years ago, with remote work and distributed employees now the norm.

For directors and officers, this creates a new level of risk, opening up leadership to employment issues with dissatisfied workers.

4) Reputational risk. This risk is a consideration for organizations of all industries and sizes. Keeping pace with all the places an organization can be reviewed is a challenge. A Pew Research Center survey conducted in the first quarter of 2021 established that 31% of adults self-report online activity “almost constantly" and 85% report going online daily. The amount and speed at which information spreads online can be overwhelming without the right help.

5) Event-driven litigation. When an event takes place at one of your client's organizations— such as public claims of discrimination, harassment or antitrust compliance—it can be difficult for them to stay on top of the claims process. As their agent, you provide advice and guide them through this process. However, oftentimes, you're the last to know of key company changes or events.

6) Executive compensation. To take an organization to the next operational level, you often need to invest in the right talent. However, it's a Catch-22 for many organizations, specifically those in the nonprofit sectors. Publicizing executive compensation for these organizations can lead to issues of executive pay litigation.

The right guidance and due diligence can be provided upfront to your nonprofit clients to help make appropriate decisions when it comes to executive compensation. If your client is part of a study showing companies with leaders receiving above average compensation—making them a potential target—you should know.

Patrick Mitchell is executive risks lead at Coalition Inc.