D & O LIABILITY SCORECARD
Director & Officer Liability Scorecard
Understanding Your Level Of Risk
BY : COOKE INSURANCE GROUP
Claims against directors and officers are becoming increasingly common . In fact , according to recent estimates , one out of every three Canadian businesses have faced a claim related to their directors and officers in the past decade . Your business and its directors and officers could be sued by customers , current or former employees , competitors , regulators , creditors , vendors , or even investors . What ’ s more , this can happen even if your organization is not a large , publicly traded company .
The cost of defending directors and officers ( D & O ) claims can run well into the six figures , leaving a business financially crippled . Even worse , your directors and officers put everything they have on the line since even their personal assets may be at risk in the event of a D & O liability claim . As a result , D & O liability insurance has become an essential component of most businesses ’ insurance portfolios .
To help businesses better understand the level of risk their directors and officers face , Cooke Insurance Group has developed this Directors and Officers Liability Scorecard .
Instructions : Please note that each section will have its own instructions related to scoring . Please review them carefully . After you have completed all of the sections to the best of your ability , add up your score and determine your level of risk by utilizing the chart at the end of this document .
SECTION INSTRUCTIONS The following points will be assigned for each response :
YES : 4 POINTS NO : 0 POINTS UNSURE : 4 POINTS
BUSINESS OPERATIONS & HISTORY YES NO UNSURE SCORE
1 . At any point in the past five years , has your business experienced any changes in senior management ? q q q
2 . At any point in the past five years , has control of your business changed hands or been offered for sale ? q q q
3 . At any point in the past five years , has your business accepted outside investments ? q q q
4 . At any point the past five years , has your business filed for bankruptcy or breached any of its debt covenants , loan agreements or contractual obligations ? q q q
5 . At any point in the past five years , has your business or one of its directors , officers or employees been involved in a labour- or employee-related dispute or been accused of harassment or discrimination ?
6 . At any point in the past five years , have any competitors , current or former employees , customers , suppliers , contractors or other third parties brought suits against your business for alleged wrongdoing ? q q q
q q q
7 . At any point in the past five years , has your business made layoffs or staff reductions ? q q q
8 . At any point in the past five years , has your business been involved in any proposed or completed mergers , acquisitions or divestitures ? q q q
9 . At any point in the past five years , has your business made a substantial change to its operations or sources of revenue ? q q q
10 . At any point in the past five years , has your business hired an employee who had access to proprietary information , trade secrets other forms of confidential business information at his or her previous job ?
11 . At any point in the past five years , have any of your directors or officers made a material representation to potential investors , customer , contractors , suppliers or third parties ?
SECTION SCORE :
q q q
q q q
6 | SPRING 2017