Global conflicts can affect business operations, so they can also affect your D&O risks. As conflicts continue to break out around the globe, business leaders may want to examine their war-related D&O exposures.
Turbulent Times
We’re in a turbulent decade, according to the World Economic Forum. The 2026 Global Risks Report, released in January, found that geoeconomic confrontation and state-based armed conflict are considered the top two risks most likely to trigger a material global crisis in 2026, and that statement was made before the 2026 Iran war began.
According to Risk & Insurance, a report from Allianz warns that D&O risks are increasing, and geopolitical uncertainty is part of the reason. Directors can be held responsible if the company misjudges geopolitical risks or fails to adapt, and as worldwide conflicts increase, boards are having to reassess their approach to risk management.
Trade Tensions and D&O Exposures
Geopolitical conflicts affect global economic policy, trade tensions and sanctions, all of which can have direct and indirect effects on business.
Back in 2023, the D&O Diary reported that there were at least two securities class action lawsuits tied to trade tensions between China and the U.S., which had increased amid the Russian invasion of Ukraine. One involved a data storage company that was hit with a $300 million penalty for violating Export Administration Regulations regarding a Chinese technology company. The other involved a health monitoring platform company that had partnered with a China-based firm that became listed on the Department of Commerce’s Entity List and saw declining revenues.
As conflicts drag on, the risks can become more complicated. In March 2026, another D&O Diary article looked at the long-term compliance and disclosure obligations that had developed as the Ukraine conflict entered its fifth year. Companies can now be expected to have appropriate disclosures and effective internal controls.
Supply Chain and Energy Disruption
Wars also tend to affect global supply chains and energy prices. With the Iran war, this is a growing concern.
The Strait of Hormuz is a major shipping route, and Iran has focused on blocking it and attacking vessels. NPR says around one-fifth of the world’s oil supply normally transits the Strait of Hormuz, and although the U.S. has responded by releasing stockpiles of oil from the Strategic Petroleum Reserve, analysts warn it may not be enough to offset prolonged disruption.
Supply chain disruption can trigger revenue loss, extra expenses and breaches of contract, all of which can contribute to D&O exposures. For example, investors may argue that disclosures regarding risks were inadequate, or that the business leaders failed to strengthen supply chain adequately in light of known risks. This is still a very new conflict, and it’s not clear how long it will last, but the longer it continues, the more likely it is to impact businesses profoundly.
Wartime Cyberattacks
Cyber warfare has become a significant part of modern conflict.
According to Banking Dive, regulators are warning financial institutions about increased cybersecurity risks amid the Iran war, while The Wall Street Journal says Iran appears to behind a cyberattack on Stryker, a medical-technology company.
In addition to causing business disruption and financial loss, cyberattacks can trigger shareholder lawsuits. For example, shareholders may claim that the company failed to disclose its risks or overstated the strength of its cybersecurity. As a result, wartime cyberattacks could ultimately result in D&O lawsuits.
Shielding Your Company from War-Related D&O Exposures
It’s said that all’s fair in love and war, but your shareholders may disagree. Although companies have no control over global conflicts, they do exercise control over their preparations and responses.
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Consider how to make your company more resilient in the face of increased global conflict. Measures may include supply chain redundancy and increased cybersecurity.
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Assess the impact of trade policy and sanctions. Determine whether current or likely restrictions could impact your company.
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Check your disclosures. When losses occur, corporate disclosures can come under scrutiny. Adequate disclosures are an important part of fulfilling your obligations to shareholders.
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Review your D&O insurance coverage. D&O policies may include war exclusions that restrict your coverage.
Does your D&O coverage provide adequate protection for your risks? Contact the NSI Capital Markets Group for a review of your D&O coverage.
