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ARTICLE · 19 SEPTEMBER 2019

Cyber Insurance And D&O Liability

In the past decade, there have been several reports of cybersecurity attacks and data breaches to large corporations.

CanadaCorporate/Commercial Law

Introduction

In the past decade, there have been several reports of cybersecurity attacks and data breaches to large corporations.1 In many cases, those affected by the breach want to hold the directors and officers accountable, as they feel the corporation failed to implement the proper security measures to prevent a breach from happening or did not effectively handle the aftermath of the breach. However, directors and officers generally enjoy limited personal liability subject to a few exceptions.2 Nevertheless, as more specific guidance emerges for directors and officers handling cybersecurity issues, the scope of this liability may widen.3 Thus, directors and officers should not take comfort in the substantial barriers that prevent them from being held liable for issues relating to the organization.4 In fact, despite these substantial barriers, shareholders continue to pursue derivative actions against directors and officers.

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