How to navigate regulatory changes and mitigate D&O risks

How to navigate regulatory changes and mitigate D&O risks

How to navigate regulatory changes and mitigate D&O risks | Insurance Business Canada

Insurance News

How to navigate regulatory changes and mitigate D&O risks

Expert spotlights the role of D&O insurance for financial institutions

Insurance News

By
Mika Pangilinan

As financial institutions navigate a shifting regulatory landscape, understanding the impact of directors and officers (D&O) insurance is more crucial than ever.  

Apraku, who serves as assistant vice president of underwriting management liability and specialty lines, pointed to changes such as the intensified enforcement of anti-money laundering regulations and more stringent data privacy requirements.  

“Any failures in meeting these obligations may lead to regulatory investigations, fines, and or potential claims,” said Apraku, as she noted recent investigations and enforcement actions related to fraud and mismanagement in the asset management space. 

For instance, Bridging Finance Inc.,an alternative asset management firm, was investigated by the Ontario Securities Commission (OSC) in 2021 based on allegations of misappropriation of investor funds and false statements. 

According to Apraku, the OSC placed the firm into receivership, froze US assets, and took legal action against the company and its executives. 

“This is just one example that highlights how Canadian regulatory bodies such as the OSC actively investigate and take enforcement actions against asset management firms found to be involved in fraudulent activities, misleading investors, or other regulatory violations,” she said. “These actions also emphasize the increased scrutiny and accountability imposed on directors and officers in the Canadian asset management space.” 

Considering the risks associated with D&O exposures, Apraku suggested several strategies financial institutions can adopt to stay compliant. 

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One way to do this is to establish a robust corporate governance framework that “clearly outlines individual roles, responsibilities, and decision-making processes to help minimize the risk of claims arising from allegations of mismanagement or have a breach of fiduciary duty,” she said.  

Another strategy she suggested is conducting regular compliance training for directors, officers, and employees to educate them about regulatory requirements and emerging risks.

 Lastly, Apraku highlighted the importance of working with experienced brokers and insurers to ensure organizations have comprehensive management liability insurance coverage.  

Access the full IB Talk interview to hear more of Abena Apraku’s insights on D&O insurance.

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