Risk Insider: Nir Kossovsky

Directors and Officers Now Face Personal Risk

By: | December 16, 2016 • 3 min read
Nir Kossovsky is the Chief Executive Officer of Steel City Re. He has been developing solutions for measuring, managing, monetizing, and transferring risks to intangible assets since 1997. He is also a published author, and can be reached at [email protected]

If you asked the typical public company director, in the early 1980s, about Directors & Officers Liability Insurance, he might have scoffed, feeling secure in the knowledge that he did nothing that put him personally at risk of a lawsuit.

By the late 1980s, the number of lawsuits against directors and officers exploded, D&Os discovered that one needn’t be liable to be damaged, and D&O insurance became commonplace.


Today, we are at a similar inflection point as social media, public anger at large institutions and outsized expectations by stakeholders push reputational risk to corporations and their boards to unprecedented levels.

New research from Steel City Re shows that the level of generalized anger in our society, which we all recognize intuitively, is on an upward trend in recent years.

That anger requires outlets and there is no shortage of players, ranging from bloggers purveying “news” that may or may not be accurate to elected officials in Washington, D.C., who are willing to exploit the public’s outrage and direct it toward certain targets.

Add to the mix a President-elect who seems more than willing to criticize corporate actions and publicly shame individuals; and an overall environment of heightened expectations for corporate performance, often fueled by share buy-backs, and every prominent company and executive in America needs to be concerned.

Social media has become weaponized as a result of its speed and penetration, combined with the heightened level of generalized societal anger seeking outlets on which to vent.

Directors and officers finding themselves in the crosshairs are discovering that they are largely unprotected. D&O insurance covers legal liability, but not the very tangible and significant financial losses they can suffer as a result of reputational damage.

The average director, for example, earns approximately $250,000 a year to serve on a corporate board and he or she usually serves on multiple boards.

If he or she is forced to resign as a result of reputational attacks related to the board’s oversight of the company – and if he or she becomes less desirable as a member of other corporate boards, that could represent a loss of millions of dollars over the course of a career.

And yet, despite the dramatically increased risk, many directors and officers are asking a new variation of the question they asked themselves in the early 1980s: “If I’ve done nothing to cause damage to my personal reputation, why do I need protection?”

The data we’ve analyzed (here), explains why directors and officers needn’t be culpable to be damaged. It includes 60 million data points for 7,500 public companies over the five-year period between 2011 and 2016 and it demonstrates what companies and their officers and directors are up against:

  • Losses linked to reputational damage at public companies have increased by 461 percent over the past five years.
  • Losses experienced due to reputational issues directly correlate to increases in generalized public anger as demonstrated by angry posts on social media.
  • Social media has become weaponized as a result of its speed and penetration, combined with the heightened level of generalized societal anger seeking outlets on which to vent.
  • Outsized expectations by investors about corporate performance, often exacerbated by stock buy-backs that raise stock prices short-term, have created increased vulnerability and potential for losses when companies are attacked.

In this environment, companies and members of their leadership need defenses for a different kind of battle – a battle in the court of public opinion, where, unlike in courts of law, there are no rules of evidence.


Success on this battlefield requires a preemptive strategy – using reputation warranties, financially backed reputation attestations, and other cutting edge crisis mitigation tools to build reputation resilience before attacks occur.

With much of the public unable to distinguish between false news and real news, with increasing numbers of people receiving information through social media rather than traditional media, with elected officials eager to channel the public’s discontent through public hearings and investigations, and with high expectations driven by stock buy-backs expected to continue at a steady pace, companies need to explore and deploy new strategies to deal with new realities.

And they need to bring reputational issues into the board room as a strategic priority for the future of the enterprise and for themselves.

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Janet Sheiner, VP of risk management and real estate at AMN Healthcare Services Inc., sees innovation as an answer to fast-evolving and emerging risks.
By: | March 5, 2018 • 4 min read

R&I: What was your first job?

As a kid, bagging groceries. My first job out of school, part-time temp secretary.

R&I: How did you come to work in risk management?

Risk management picks you; you don’t necessarily pick it. I came into it from a regulatory compliance angle. There’s a natural evolution because a lot of your compliance activities also have the effect of managing your risk.

R&I: What is the risk management community doing right?


There’s much benefit to grounding strategic planning in an ERM framework. That’s a great innovation in the industry, to have more emphasis on ERM. I also think that risk management thought leaders are casting themselves more as enablers of business, not deterrents, a move in the right direction.

R&I: What could the risk management community be doing a better job of?

Justified or not, risk management functions are often viewed as the “Department of No.” We’ve worked hard to cultivate a reputation as the “Department of Maybe,” so partners across the organization see us as business enablers. That reputation has meant entertaining some pretty crazy ideas, but our willingness to try and find a way to “yes” tempered with good risk management has made all the difference.

Janet Sheiner, VP, Risk Management & Real Estate, AMN Healthcare Services Inc.

R&I: What was the best location and year for the RIMS conference and why?

San Diego, of course!  America’s Finest City has the infrastructure, Convention Center, hotels, airport and public transportation — plus you can’t beat our great weather! The restaurant scene is great, not to mention those beautiful coastal views.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

The emergence of risk management as a distinct profession, with four-year degree programs and specific academic curriculum. Now I have people on my team who say their goal is to be a risk manager. I said before that risk management picks you, but we’re getting to a point where people pick it.

R&I: What emerging commercial risk most concerns you?


The commercial insurance market’s ability to innovate to meet customer demand. Businesses need to innovate to stay relevant, and the commercial market needs to innovate with us.  Carriers have to be willing to take on more risk and potentially take a loss to meet the unique and evolving risks companies are facing.

R&I: Of which insurance carrier do you have the highest opinion?

Beazley. They have been an outstanding partner to AMN. They are responsive, flexible and reasonable.  They have evolved with us. They have an appreciation for risk management practices we’ve organically woven into our business, and by extension, this makes them more comfortable with taking on new risks with us.

R&I: Are you optimistic or pessimistic about the U.S. health care industry and why?

I am very optimistic about the health care industry. We have an aging population with burgeoning health care needs, coupled with a decreasing supply of health care providers — that means we have to get smarter about how we manage health care. There’s a lot of opportunity for thought leaders to fill that gap.

R&I: Who is your mentor and why?

Professionally, AMN Healthcare General Counsel, Denise Jackson, has enabled me to do the best work I’ve ever done, and better than I thought I could do.  Personally, my husband Andrew, a second-grade teacher, who has a way of putting things into a human perspective.

R&I: What have you accomplished that you are proudest of?

In my early 20s, I set a goal for the “corner office.” I achieved that when I became vice president.  I received a ‘Values in Practice’ award for trust at AMN. The nomination came from team members I work with every day, and I was incredibly humbled and honored.

R&I: What is your favorite book or movie?

The noir genre, so anything by Raymond Chandler in books. For movies,  “Double Indemnity,” the 1944 Billy Wilder classic, with insurance at the heart of it!

R&I: What is your favorite drink?


Clean water. Check out Water.org for how to help people enjoy clean, safe water.

R&I: What’s the best restaurant at which you’ve eaten?

Liqun Roast Duck Restaurant in Beijing.

R&I: What is the most unusual/interesting place you have ever visited?

China. See favorite restaurant above. This restaurant had been open for 100 years in that location. It didn’t exactly have an “A” rating, and it was probably not a place most risk managers would go to.

R&I: What is the riskiest activity you ever engaged in?

Eating that duck at Liqun!

R&I: If the world has a modern hero, who is it and why?

Dr. Seuss who, in response to a 1954 report in Life magazine, worked to reduce illiteracy among school children by making children’s books more interesting. His work continues to educate and entertain children worldwide.

R&I: What do your friends and family think you do?

They’re not really sure!

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]