There are plenty of threats to business operations from outside an organization, but there are similarly risky issues associated with people within corporate operations. Everyone from general employees to trained experts, shareholders and business investors can create concerns that escalate claims to management levels.
Understanding these risks can help businesses understand when and how to acquire general professional liability services. As Business Insurance Online stated, there have been rising issues about how to handle these threats, as there’s a major line between compliance and concerns regarding how well matters are managed.
“The underlying causes can be anything that caused harm to the company such as breach of fiduciary duty or a conflict of interest on the part of one of the directors,” said Jacqueline Urban of Aon Risk Solutions. “Excessive compensation has been an issue in the past, but the big ones now are the Foreign Corrupt Practices Act and cyber breach.”
Unfortunately, the line has not been drawn between when internal issues are really the fault of the corporation, or if negligence can be claimed in issues where security falls into question, or even more in instances where operating standards may not be in line with best practice standards. As the source noted, data breach issues aren’t handled any differently than any other causes of general professional liability cases. That means that firms without proper security protocols or automated malware solutions could find themselves facing even more fines and settlements if their shareholders choose to press further claims following these incidents.
As Business Insurance pointed out, there can be more damage than just what they face in court. The public perception of an organization is largely based on its performance in its specific industry, as well as in the realm of handling public relations issues. A lawsuit can detract from a business financially, as well as in terms of reputation, causing long-term economic distress beyond just the payouts to which a corporation agrees.
With that in mind, businesses should be careful how they choose to share data with their investors. Following a data breach, claims issue, legal matter or other issue resulting in corporate entanglement, Business Insurance recommended taking careful steps to release necessary content to shareholders. These individuals should be among the first to know of an issue, and these notifications need to include steps by which the organization is rectifying the situation.
This is particularly important in situations where policies and regulations are particularly strict. The New York Law Journal reported that legal teams themselves should be aware that they can fall victim to general professional liability cases as well. In these instances, keeping up with responsiveness and planning a method of handling issues is just as important as in other lines of business.
The difference is, certain industries do have different reporting guidelines, be they to shareholders, consumers or the federal government. That means taking multiple instances to review operations and ensure compliance, as well as verifying that security standards are up to par. This will help generate better outcomes in general professional liability cases. As the source noted, such cases can wind up having a huge impact on the financial well being of organizations, as well as their investors, employees and the people they serve.
That’s not just because of the negative image it can project of the corporation, deterring business even after negative situations have been resolved. It’s because general professional liability services may need to increase in cost in order to handle payouts and the like. It’s therefore important to all organizations that they take steps to protect themselves by acquiring liability tools, as well as paying attention to the kinds of circumstances in the business environment that could lead to these situations to occurring.