Global businesses have identified health and safety risk as their top priority, ahead of cyber-attacks, data loss and regulatory breaches, according to a survey by Clyde & Co. Its annual Global directors’ and officers’ liability report 2024 found that social risks had climbed significantly, with health and safety ranking first as a concern for 86 per cent of respondents.
“It is unclear what the precise reason is for this rise in concern but, certainly in the UK, 2023 saw highly-publicised fines levied on major corporations (e.g. Network Rail, Morrisons, Serco and Transport for London),” the report said, “alongside a noticeable uptick in enforcement notices issued by the Health and Safety Executive (HSE) and reports of the HSE’s impressive 94 per cent conviction rate of individuals.”
Systems and controls
Another major change in the survey this year was the focus on systems and controls – the first time the category has been identified as a top ten concern. The driver for a focus on systems and controls is likely to be attention from regulators – particularly given an increasing number of fines by regulators following cyber security and data breaches at large organisations.
“This is in line with a trend we have witnessed in recent years for financial regulators to impose significant fines for a range of systems and controls failings,” the report said, “demonstrating the importance of such controls in preventing insider trading, money laundering, bribery and fraud, amongst other things.”
This trend is likely to intensify now that the Financial Reporting Council has strengthened requirements around internal controls in its revised the UK Corporate Governance Code.
Sanctions
The UK government has also increased enforcement efforts for those organisations breaching sanctions. While the Office of Trade Sanctions Implementation was only created in December 2023, the report expects the body to begin cracking down on infringements of the Economic Crime (Transparency and Enforcement) Act 2022 later this year.
“To avoid and reduce these risks, it is essential to have effective risk management and appropriate systems and controls in place,” the report said.
