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A recent
survey of Canadian directors of TSX-listed companies conducted by
the CIBC Centre for Corporate Governance and Risk Management at
Simon Fraser University's Segal Graduate School of Business reveals,
for those at the top of the corporate hierarchy, a daunting milieu.
The survey, the
first in Canada in 10 years reveals Directors' attitudes toward
risk, the nature of the risks they face, and their practices
regarding risk management, insurance, and D&O insurance. All TSX-listed
firms were queried and seventy percent of respondents were board
chair, the CEO, or both.
Canadian
directors of TSX-listed companies say they face a high risk of
potential lawsuits from shareholders and
institutional investors around issues related to financial
accounting disclosure and fraud. Significantly one-third report that
insurance companies offering directors' and officers' (D&O)
insurance have denied their claims, a much higher rate than U.S.
companies.
Four insurance
companies currently provide the majority of D&O coverage and
many TSX-listed firms use more than one insurer. Over the past three
years, 14 percent of respondents reported actual or threatened
claims, with one-third of those claims disputed by their own
insurance companies.
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