Directors and Officers: Key Risks and insights 2026
Business leaders continue to face a challenging and uncertain corporate landscape in 2026.
Economic pressures, rising costs, regulatory change and geopolitical instability are increasing the potential liability exposure for directors and officers.
Below, we examine some of the key risks emerging this year and the concerns we are hearing most often from clients when reviewing their Directors' & Officers' (D&O) insurance arrangements.
Bankruptcy risk
Ongoing economic uncertainty continues to place many businesses under financial strain, increasing the risk of insolvency.
According to figures from The Insolvency Service, company insolvencies have remained at levels not seen since the 2008/09 financial crisis, with more than 22,000 companies becoming insolvent during the first 11 months of 20251.
When a company enters insolvency, directors and officers can face increased scrutiny from creditors, shareholders, regulators and insolvency practitioners. Decisions made before financial difficulties emerged may be reviewed closely, potentially resulting in allegations of wrongful trading, breach of duty or mismanagement.
For this reason, ensuring that appropriate D&O cover is in place remains an important consideration for businesses of all sizes.
Emerging risks
Alongside traditional management liabilities, directors and officers must also stay ahead of evolving risks. Understanding and managing these exposures is increasingly important as regulatory expectations and stakeholder scrutiny continue to grow.
Some of the key emerging risk areas include:
Cyber
As businesses become increasingly dependent on technology, cyber risk remains one of the most significant concerns facing directors and officers.
Insurer Allianz has identified cyber risk as the leading concern for UK business owners for five consecutive years2.
While cyber insurance plays a vital role in managing these risks, directors should also ensure that robust cyber security, governance and incident response measures are in place.
Artificial Intelligence
Rapid development in artificial intelligence (AI) brings significant opportunities for companies, helping to automate and streamline business processes, increase productivity and improve customer service.
A report commissioned by Microsoft predicts a £550 billion boost to the UK economy over the next 10 years if it adopts AI and cloud technology.
But adopting AI also brings risks for directors and officers.
AI washing (where false or misleading statements are made about the use of AI) can leave a company open to legal action from investors and regulators.

Under the Digital Markets, Competition and Consumers Act 2024, the Competition and Markets Authority has the power to fine a company up to 10% of its global turnover4 for infringing consumer protection law, which includes AI washing.
D&O claims could also result from inappropriate use of AI. This may happen where an AI model contains unintended bias or infringes existing privacy and copyright laws.
For directors and officers, balancing the risk and reward associated with AI is essential. While it can bring competitive advantage, directors need to understand the technology and how it is being used within the company, especially given the speed at which it is developing.
PFAS ("Forever Chemicals")
Forever chemicals, which are also known as per- and polyfluoroalkyl substances (PFAS), are an emerging issue for directors and officers, highlighting the importance of constantly scanning the risk horizon.
First developed in the 1940s, they were seen as wonder chemicals, giving us everything from non-stick frying pans to waterproof clothing and firefighting foams. However, increasing evidence suggests that certain PFAS may be linked to serious health and environmental issues, including some forms of cancer and reduced fertility.
Because these chemicals break down extremely slowly, they can persist in the environment for decades, creating potential long-term liabilities for businesses.
Although regulatory action in the UK has so far been less extensive than in countries such as the United States, scrutiny is increasing. In April 2025, the Environmental Audit Committee launched an inquiry into PFAS and their regulation within the UK5.
The potential for tougher regulation and more PFAS-related claims on D&O, directors could face legal action for failing to identify or disclose potential PFAS liability exposures. Understanding the risk and exposures is essential.
Protect yourself and your business
Managing risk effectively is a fundamental responsibility for directors and officers. In today's fast-changing business environment, a single decision can have significant financial, legal and reputational consequences.
With companies facing so much change and uncertainty, keeping informed and having cover in place can provide considerable reassurance to directors and officers.
To discuss your Directors' & Officers' insurance requirements, contact Pangea Insurance Brokers today.
- Interest rates and Bank Rate: our latest decision | Bank of England
- Allianz Risk Barometer 2026
- AI could boost UK GDP by £550 billion by 2035, research shows - Microsoft UK Stories
- CMA to boost consumer and business confidence as new consumer protection regime comes into force - GOV.UK
- EAC launches new inquiry to address the risks of PFAS forever chemicals within the UK’s regulatory approach - Committees - UK Parliament


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