Loss Prevention

An effective D&O loss prevention program should accomplish numerous objectives, including:

• Reduce the liability exposure of the directors and officers, as well as the corporation, to the extent the corporation may indemnify losses incurred by management.
• Improve the corporation's ability to recruit qualified directors and officers.
• Avoid time consuming, distracting and potentially embarrassing claims and litigation.
• Enhance the defense of claims and reduce the potential recovery by a claimant.
• Improve the corporation's ability to obtain favorable D&O insurance coverage at reasonable costs.

While some loss prevention concepts seem somewhat obvious, others may be inconsistent with a corporation’s historical procedures. Management may have difficulty objectively evaluating the necessity and appropriateness of some loss prevention concepts. Sometimes, outside consultants are useful in assisting to evaluate, structure or implement programs specifically tailored to the particular corporation.