In our recent round-up of the top D&O stories so far this year, one of the top developments in 2026 we noted is the growing amount of AI-related D&O litigation. The AI-related litigation trend has continued to develop, as new AI-related lawsuits continue to be filed. In recent days, plaintiffs’ lawyers have filed two further AI-related securities class action lawsuits, first, against the Chinese Internet company Baidu, and, separately, against the AI-powered Internet advertising firm AppLovin. Both new lawsuits are based on AI-washing type allegations. The new lawsuit against Baidu also reflects the surging levels of securities litigation this year involving Chinese companies, as discussed further below.

The Baidu Lawsuit

Baidu maintains the most popular Internet search engine in China. In the past, the company has realized most of its revenue from online marketing services. In 2025, the company online marketing services revenue began to decline. However, the recently filed complaint alleges, the company assured investors that “its new core AI-Powered Business growth had, and would continue to, meaningfully mitigate Baidu’s Online Marketing Services decline.”

In February 2026, when the company reported its fourth quarter and full-year 2025 financial results, the company reporting overall declining revenue, but also reported that “AI-Powered Business” grew 48% year-over-year in its fiscal 2025.

In August 2026, when the company reported its 2Q26 financial results, the company again reported overall declining revenues, including declines in Online Marketing services revenue. “Critically,” the complaint alleges, “the Baidu Core AI-Powered Business fell 8% quarter over quarter,” and its largest AI business component, AI Cloud Infra, fell 17% quarter over quarter. The complaint alleges that the company’s share price declined nearly 13% on this news.

On September 14, 2026, a plaintiff shareholder filed a securities class action lawsuit in the Southern District of New York against Baidu and certain of its directors and officers. The complaint purports to be filed on behalf of investors who purchased the company’s securities, between November 18, 2025, and August 17, 2026. A copy of the new lawsuit against Baidu can be found here.

The complaint alleges that the defendants failed to disclose to investors “(1) that the Company had overstated the ability of its AI business to mitigate rapid declines in its legacy online marketing business; (2) that, as a result, the Company’s revenue was reasonably likely to decline; and (3) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.”

The complaint alleges that the defendants violated Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the class.

The AppLovin Lawsuit

AppLovin provides artificial intelligence-powered advertising solutions. The tools the company provides its customers use AI models to more efficiently match an advertisement to a prospective consumer.

The complaint alleges that during the class period the defendants touted the purported strength of AppLovin’s AI models as a major driver of the Company’s growth, telling investors that AppLovin was “constantly improving” its models. The company, the complaint alleges, described its business approach as promoting a “virtuous cycle” of improvement and revenue, in which better models yielded greater returns for the Company’s advertiser customers, thus incentivizing them to increase their spending on AppLovin’s services, and encouraging new customers to begin using AppLovin’s services. The company’s strategy included, in particular, the development and roll out of a generative AI video creative feature.

On July 13, 2026, a securities analyst’s report noted softer than expected e-commerce ad growth amid concerns about AppLoving Ads rollout, the footprint for which expanded at a lower-than-expected pace. The price of the company’s shares fell 12.7% on this news.

Then on August 5, 2026, the company announced its financial results for the quarter ending June 30, 2026. The company reported quarterly revenues below consensus analyst estimates. Among other things the company noted that its generative AI video tool was “still a work in process.” The company’s share price declined a further 19%.

On September 16, 2026, a plaintiff shareholder filed a securities class action lawsuit in the Northern District of California against AppLovin and certain of its directors and officers. The complaint purports to be filed on behalf of a class of investors that purchased the company’s securities between February 12, 2026, and August 5, 2026. A copy of the new complaint filed against AppLovin can be found here.

The complaint alleges that during the class period, the defendants misrepresented or failed to disclose that: “(i) the generative AI video creative feature for the Company’s AppLovin Ads platform was subject to significant development delays, making its release on the Company’s timeline unlikely; (ii) Defendants overstated the constancy with which AppLovin was improving its AI models; (iii) for these reasons, among others, AppLovin had significantly overstated the benefits and reliability of the purportedly ‘virtuous cycle’ and ‘compounding’ value proposition that its AI models provided to customers and to the Company; and (iv) as a result, Defendants’ public statements were materially false and misleading at all relevant times.”

The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks damages on behalf of the plaintiff class.

Discussion

The allegations against the defendant companies are of course company specific, but the allegations also reflect typical AI-washing allegations, in which the securities lawsuit plaintiff alleges that the defendant company overstated its AI-related business prospects or opportunities.

The new lawsuits have only just been filed, and it remains to be seen how they will fare. A neutral observer might well note that it may yet turn out that Baidu’s AI business could in fact offset the declines in its legacy business, and AppLoving’s rollout of its new AI-powered tools could yet prove to be successful.

The new lawsuits do, as noted at the outset, represent examples of an important current D&O litigation trend, which is the growing numbers of AI-related lawsuit filings. By our tally, these new lawsuits bring the 2026 count of AI-related lawsuit filings to 24, representing nearly 14% of all new securities class action lawsuit filings this year. The 24 YTD AI-related lawsuit filing total compares with the 16 AI-related lawsuits filed during the full year of 2025. Clearly, by year-end, AI-related lawsuits will represent a significant component of overall securities suit filings this year.

It is also noteworthy that the new Baidu lawsuit involves a Chinese company. There has been a rash of securities suit filings against Chinese companies in 2026. According to our tally, this new lawsuit against Baidu is the 13th lawsuit filed this year against companies based in China or in Hong Kong.

One thing driving the number of new filings against Chinese and Hong Kong companies this year is the number of new lawsuits filed against companies based in China and Hong Kong involving pump-and-dump or other market manipulation-based lawsuits. There have been a total of six lawsuits this year filed against companies based on China or Hong Kong based on market manipulation allegations. However, as the new Baidu lawsuit shows, not all of suit filings against companies based in China and Hong Kong are  based on market manipulation allegations.

The 13 lawsuits filed this year against companies based on China and Hong Kong represent nearly 8% of all U.S. securities lawsuit filings this year and nearly 40% of all securities suits filed this year involving non-U.S. company defendants. So, not only are AI-related lawsuits driving the overall numbers of securities suit filings in 2026, but another significant factor contributing to the overall volume of securities litigation is the number of companies that have been filed this year against companies based in China and Hong Kong.

The D&O Diary has been following the evolving litigation and management liability issues arising from the Trump Administration’s use of the International Emergency Economic Powers Act (IEEPA) to impose tariffs, the subsequent judicial decisions invalidating those tariffs, and the wave of refund litigation that has followed. As these developments have unfolded, tariff-related litigation has expanded beyond refund actions and shareholder claims to include consumer lawsuits alleging that companies improperly passed tariff costs on to customers.

One recent example is the litigation filed against Levi Strauss & Co. (Levi’s) in California and Louisiana. The allegations against Levi’s reflect the continued filing of tariff-related claims at a time when the scope and applicability of U.S. tariffs remain in flux. Although the tariffs imposed under IEEPA were invalidated by the Supreme Court, other tariffs and tariff-related trade measures remain in effect, including recent U.S. tariffs on Canadian imports and Canada’s corresponding countermeasures. These continuing trade actions demonstrate how rapidly changing tariff policies can create significant challenges for corporate governance, disclosure practices, and risk management.

Continue Reading Tariffs and the Continuing Wave of “Double Recovery” Consumer Class Actions
Puerta del Sol, Madrid

This past week I was on assignment for The D&O Diary in Madrid, Spain’s capital and largest city. It was a return trip to the city for me, although I think I appreciated it much more this time. It is without a doubt a great place and a great place to visit.

The primary purpose of my visit to Madrid was to participate as a keynote speaker at the Kennedys law firm’s annual Financial Lines Day event. The event, which was held at the Palacio de los Duques de Pastrana, was remarkably well-attended. Over 200 financial lines insurance professionals attended. I would like to congratulate Ignacio (Nacho) Figurol and his Kennedys colleagues for a very successful event.

Here’s the view from the podium at the conclusion of my keynote address. As you can see, the room is at capacity. I came away from this event with a better appreciation for how broad, deep, and sophisticated the Spanish D&O insurance marketplace now is. I also have to say it was a distinct experience to be in another country where I know few people, but in which everyone knows who I am. I very much appreciated and enjoyed the opportunity to speak to this audience.

Here’s a picture taken with Nacho Figuerol during the reception following the educational sessions. I am very grateful to Nacho and his colleagues at the Kennedys law firm for inviting me to participate in this excellent event. The event was first class in every respect and I was grateful to be a part of it.
One of the great things about an event like this for me is that it allows me the chance to make new friends. Here’s a picture with a group of young brokers from AON, all of whom wanted to get a picture with me. I was struck by how enthusiastic they were, and how interested they were in my remarks. (If anyone wonders why I am still working years past the traditional retirement age, well, this is the reason.)
Here’s a picture with Rochio Sánchez, of Chubb. Rochio and I did not coordinate in advance, but I was pleased that Rochio’s perspective during the panel that preceded my keynote address so closely dovetailed with my comments. I was even more pleased that I was able to follow her remarks, more or less, as her panel was entirely in Spanish.
This is Ivan Bajarano of the Kennedys law firm. Ivan approached me during the reception to tell me that I was responsible for his going into financial lines insurance. Ivan told me that during his University studies, he had written a paper about how the insurance industry responded to COVID-19. While doing his research, he came across The D&O Diary. That was his first encounter with financial lines, but it was enough to get him interested in the field, which he eventually entered upon graduation. He now works at Kennedys with Nacho.

I had a host of other meetings and events while I was in Madrid. On my first full day in the city, I participated in another, smaller, less-formal event at the Kennedys law firm’s offices. The event was organized by the Marsh Madrid office, and the audience included representatives from a number of larger Spanish companies. It was an interesting session. I was struck by how interested and engaged the audience members were. I always say, no one learns more than me from these events. I learn so much from the questions.

I was honored to be a part of this distinguished panel at the Marsh event. From left to right, Ignacio del Corral, Global Head of Corporate Insurance at Banco Santander; José Martinez, International Head of Financial Lines Claims at AIG; Maurice Pesso, a partner in the Kennedys law firm’s New York office; me; and Oswald Carvalho, of the March Madrid office, who moderated the session.
Here’s a picture with Javier Ybarra, Managing Director, Marsh Madrid. I would like to thank Javier and his colleagues for inviting me to participate in this very interesing session. I thoroughly enjoyed being a part of it and meeting with the audience of company professionals.
In addition to the various educational sessions in which I participated while in Madrid, I also had the chance to catch up with some friends in the city. I had a very enjoyable lunch with Alejandro (Alex) Alfaro Gonzalez of Generali. Alex and I first met many years ago in Barcelona, and we have met again several other times over the years. I am grateful to Alex for inviting me out for lunch to meet while I was in town. By the way, the lunch was excellent. Thank you, Alex!
I also attended an evening reception sponsored by Arch Insurance. The rooftop reception was held at the Círculo de Bellas Artes de Madrid, which afforded exceptional views of the city — and beyond.
My thanks to Ernesto Medina Gómez, Head of Executive Assurance (Europe) for Arch Insurance, for inviting me to the Arch reception. I have known Ernesto for many years since we first met in London. It was great to have a chance to catch up with Ernesto and to hear about all of his adventures since the last time we met.

While I had many meetings and scheduled events while I was in Madrid, I did also have a little bit of a chance to look around while I was there. I was fortunate that while I was in town, the weather was nothing short of spectacular. The days were sunny and warm (well, maybe a little hot, too) and the evenings were long and pleasant.

The key for me in enjoying my visit to Madrid so much this time is that I stayed closer to the historic city center. On prior visits, I had stayed in hotels closer to the business district — kind of dull. This time, I stayed right in the center of the action, close to the Puerta del Sol (pictured at the top of the post) and the Plaza Mayor (pictured here). The Puerta del Sol is the absolute center of the city, and the Plaza Mayor is the city’s historic heart. The interesting thing about Madrid as a tourist destination is that it does not have any iconic or widely recognizable landmarks (like, say, the Eiffel Tower in Paris or the House of Parliament in London). Instead, what makes Madrid great is the accumulation of so many interesting and attractive features. It is such a walkable city, too, and at just about any time day or night, the city’s pavements are thronged with people out just enjoying the city.
While Madrid does not have any particular landmark that had come to represent the city or its image, it does have a lot of very interesting buildings. Here’s a picture of the Casa de la Villa, one of many historic buildings in the city center.
The Palacio Real de Madrid. It is an impressive building. I admit that even now, after my fourth visit to Madrid, I have not yet been inside. The weather is always too nice.
The Royal Palace and the adjacent Almudena Cathedral are build on an elevated ridge top on the western side of the city center. Because they are built on the heights, the historic buildings are visible from viewpoints all along the city’s west side. This is the view from the Parque de la Montaña, to the north of the palace and cathedral.
A long running family joke is that when I am visiting a foreign city, I only want to walk. And walk. And walk. (My family refers to it as “Dad’s Death March.”) So on my free day in Madrid, what did I do? I walked. This time, I walked north from the viewpoint depicted in the preceding picture. Eventually, my walking travels took me to the Parque de Oeste. Here’s a pro tip for anybody traveling to Madrid any time soon. If you walk through the Parque de Oeste and follow the pathways to the base of the ridge, eventually you come to the Rosaleda de Madrid, an absolutely spectacular rose garden. Ten acres of roses. Not in any of the guide books.
I literally had the rose garden to myself. Not only did I enjoy the beautiful flowers, but I had a very pleasant snooze in one of the rose arbors.

It was hot in Madrid on my arrival day, so to manage the heat, I picked up a picnic dinner and went to the Parque del Buen Retiro, a leafy 350-acre retreat on the east side of the city’s historic district. Here’s a picture of the Estanque Grande del Retiro and the Monument to Alfonso XII, both in the Retiro park. A great place for a picnic dinner. Here’s another pro tip for anyone traveling to Madrid anytime soon. If you are looking for a place to buy picnic supplies, you will want to go to the El Corte Inglés department store just north of the Puerta del Sol. On the basement level, there is an absolutely huge supermarket. Everything you could want or need for a picnic.
The Gran Via, built in the early decades of the 20th century, is Madrid’s splendid central boulevard. The street’s buildings encompass a wide variety of styles and architectural details. With its international brands, boutique hotels, playhouses, and fashionable restaurants and hotels, the Gran Via is Madrid’s answer to Paris’s Champs-Élysées. The boulevard may be one of the most vibrant urban streets anywhere.
One of the most absolute indispensible tourist destinations in Madrid is the Mercado de San Miguel. The market, which is located close to the Plaza Mayor, is more of a gourmet tapas market than a traditional grocery market. The Mercado is housed in a distinctive iron-and-glass structure, and features over thirty vendors selling a wide variety of freshly prepared tapas, hams, olives, baked goods and other food. A great place for, say, a plate of oysters and a glass of white wine.
Time for the paseo, one of Madrid’s (and Spain’s) great cultural institutions. It is more than just an evening walk or stroll. It is a chance to get out, see people, and to feel like a part of the city. Of all the many things I like about Madrid, I think I like the paseo best of all.
As I noted above, I have found that one of keys to fully appreciating Madrid is staying in the right part of the city. For the benefit of those who want to stay in the lively part of town, I have a hotel recommendation — Hotel Francisco I, located on the Calle del Arenal, between the Puerta del Sol and the Palacio Real, and near the Plaza Mayor. It is a clean, quiet hotel with a friendly staff and enjoyable breakfasts. It is an excellent base for exploring the city, especially for first time visitors.

As crypto-related litigation continues to mature, the focus has shifted beyond the threshold question of whether digital assets constitute securities. Increasingly, private plaintiffs are pursuing claims that resemble traditional securities litigation including allegations involving disclosure failures, market misconduct, and investor losses. At the same time, the Clarity Act, legislation that would have established a statutory framework for digital asset regulation and clarified the respective roles of the SEC and CFTC, failed to advance through congress. Yet digital assets continue to move further into the financial mainstream, with reports that major U.S. banks are exploring a joint stablecoin initiative.

Against that backdrop, a recent decision in the long-running Jump securities class action arising from Terraform Labs (Terraform) collapse underscores the evolving nature of crypto-related litigation. In a September 2, 2026, opinion, the Northern District of California largely denied motions to dismiss, allowing core securities fraud and market manipulation claims to proceed. Beyond its high-profile factual backdrop, the ruling highlights how crypto litigation is increasingly being analyzed through familiar securities law concepts rather than focusing solely on whether a particular digital asset qualifies as a security.

Continue Reading Crypto Securities Suit Survives Motion to Dismiss

In the following guest post, Chris Mosley and John Orr discuss the findings from the 2026 North America edition of the Global Directors’ and Officers’ Survey, developed by Willis, a WTW business, in collaboration with Reed Smith LLP. As the survey results show, cyber risk remains the leading concern for directors and officers in North America, while artificial intelligence has emerged as one of the fastest-rising areas of board-level focus. The survey also highlights growing concerns surrounding governance, regulatory compliance, supply chain disruption, and litigation risk. Chris Mosley is a partner in the Denver office of Reed Smith who focuses his practice on insurance recovery exclusively on behalf of policyholders, and John Orr is the D&O Liability Product Leader for Willis, North America, based in San Francisco. Our thanks to Chris and John for allowing us to publish their article on our site.

The 2026 edition of the Global Directors’ and Officers’ Survey, developed in collaboration between Willis, a WTW business, and Reed Smith LLP, maintains the survey’s ongoing international focus, with responses from directors, officers and risk managers in more than 40 countries. The survey asks respondents to assess the importance of specified risks for directors and officers, whether financial, reputational or both. This discussion focuses on responses from North America, including the United States and Canada. The North America region accounted for 13% of global responses, comprising 127 respondents from the United States and 3 from Canada.

This year’s North America results reflect a risk landscape shaped by a familiar combination of cyber exposure, core governance issues and the rapidly increasing prominence of artificial intelligence. Responses from both the U.S. and Canada suggest that directors and officers remain highly attuned to risks capable of causing near-term disruption, while at the same time assigning greater weight to emerging, technology-driven threats that may alter risk profiles over time.

Cyber risks retain the top spot

Cyber risk again ranked as the most significant concern for North America respondents, consistent with results from recent years. Among specific exposures, cyber attack risk (including cyber extortion) was cited as very or extremely important by 83% of respondents, making it the highest ranked risk overall. Data loss followed closely, with 81% of respondents identifying it as a critical concern. These results represent notable increases from the prior year’s survey, where data loss led at 77% and cyber attack followed at 76%; the two risks have effectively swapped positions, with cyber attack moving from number two to number one, reflecting the escalating sophistication and frequency of cyberattacks facing organizations today.

This heightened concern among North American respondents aligns with broader global trends. The World Economic Forum’s Global Cybersecurity Outlook 2026 report highlighted the growing sophistication of cybercriminals, fueled in part by rapid advances in generative AI, while IBM’s Cost of a Data Breach Report 2025 estimated that the global average cost of a data breach reached approximately $4.44 million. AI-powered social engineering, deepfake fraud and ransomware attacks have fundamentally altered the corporate threat landscape, making it increasingly difficult for organizations to distinguish genuine communications from malicious ones. Taken together, these findings underscore that cyber-related exposures continue to sit at the top of board and executive risk agendas across the region, reflecting both their frequency and potential severity.

Beyond cyber, health and safety remained a top tier concern. Eighty percent of North America respondents rated health and safety as very or extremely important, making it the third highest ranked risk overall. This represents a significant increase from its number four ranking at 71% in 2025 and contrasts with global results where health and safety remained the number one overall risk at 76%. Despite sustained focus in prior years, the category has not receded in importance, reflecting its wide ranging implications for employee well being, operational continuity and organizational reputation. Within this risk area, respondents most frequently pointed to mental health, financial well being, burnout, work demands and working hours as key workforce related challenges.

North America Top 7 Risks

The Trump Administration: Deregulation continues

Governance and compliance risks also featured prominently. Systems and controls were rated as very or extremely important by 72% of respondents, highlighting the ongoing emphasis on internal oversight, control environments and effective risk management processes. Regulatory breach followed closely at 68%, reflecting continued concern around compliance obligations and enforcement exposure. This increase from 62% in 2025 may appear counterintuitive given the deregulatory environment under the Trump Administration, but it likely reflects the complexity and uncertainty that the evolving regulatory landscape creates for companies seeking to maintain compliance.

The United States Securities and Exchange Commission (SEC) under the Trump Administration has continued to scale back the aggressive enforcement approach that characterized the Biden-era SEC under Chair Gary Gensler, moving to roll back rulemakings including effectively shelving the SEC’s climate-related disclosure rules and abandoning proposed rules related to human capital management disclosure and corporate board diversity.

Of particular note, the executive order issued in February 2025 announcing a “pause” on enforcement of the Foreign Corrupt Practices Act remains in effect, with the Attorney General having issued revised enforcement guidelines favoring a more restrained approach. Companies would be well-advised to maintain robust compliance programs regardless of the current enforcement posture, given that the Foreign Corrupt Practices Act’s (FCPA) five-year statute of limitations means violations committed during this period could be prosecuted by a future administration.

At the same time, state attorneys general have stepped up enforcement activity to fill perceived gaps left by reduced federal oversight, creating a complex compliance environment in which companies must navigate both a more permissive federal regulatory regime and potentially more aggressive state-level enforcement. While cyber risks clearly dominate the rankings, these results suggest that foundational governance disciplines retain a critical place in director and officer oversight in North America.

AI risk: A dramatic rise

One of the more notable shifts in the 2026 survey is the elevated importance assigned to artificial intelligence. AI and machine learning were rated as very or extremely important by 72% of North America respondents, placing AI firmly within the region’s top five risks. This represents a 30-percentage-point surge from just 42% in 2025 — the largest single-year increase for any risk in this year’s North America results — reflecting the rapidly growing recognition among directors and officers that artificial intelligence presents both transformational opportunity and significant liability exposure.

The concern is well-founded: according to Cornerstone Research’s Securities Class Action Filings, 2025 Year in Review, 16 AI-related securities class actions were filed in 2025, a slight increase from the 15 such cases filed in 2024, which itself represented more than double the seven cases filed in 2023. These lawsuits increasingly target so-called “AI washing,” where companies allegedly overstate AI capabilities to enhance their business prospects and inflate share prices.

Among respondents identifying AI as a material concern, the most frequently cited issues included AI generated errors and misinformation (51%), AI enabled fraud and social engineering (40%), strategic failure to adopt AI (37%), weak governance and uncontrolled AI use (32%) and poor data quality and bias (26%). The regulatory landscape for AI remains fragmented in the United States.

Under the Trump Administration, it appears unlikely that comprehensive federal AI regulation will be adopted anytime soon, with the Administration continuing to favor a light-touch approach aimed at promoting AI technological advancement. In December 2025, the President issued an executive order establishing a national policy framework for artificial intelligence, further signaling the federal government’s preference for facilitating innovation over prescriptive regulation. However, state-level activity continues apace: during 2024 and 2025, virtually every state introduced AI-related bills and a growing number of states have enacted broad AI legislation. The result is an increasingly complex patchwork of state regulations that may create significant compliance challenges for companies operating across multiple jurisdictions, particularly those with inadequate AI governance frameworks. These responses suggest that boards are increasingly grappling with both the operational risks associated with AI deployment and the longer term competitive risks associated with delayed or ineffective adoption.

Supply chain risk enters the picture

Rounding out the top risk group, supply chain issues were identified as very or extremely important by 66% of respondents. This risk was not among the top seven in last year’s North America results and its emergence reflects the growing recognition that supply chain disruptions pose direct risks to directors and officers — not only operationally but also from a liability and governance perspective.

The current environment has placed unprecedented pressure on corporate supply chains. According to a Thomson Reuters report, 72% of trade professionals identified U.S. tariff volatility as the most impactful regulatory change in 2026, a dramatic increase from 41% the previous year. The Trump Administration’s tariff policies — including sweeping tariffs on goods from China, Mexico, Canada and other trading partners — have created sustained uncertainty that affects sourcing, manufacturing and distribution strategies across industries.

One industry report found that 86% of companies reported experiencing a supply chain loss in the past year, with rising material costs, geopolitical instability and tariff and trade disputes cited as the top three drivers of disruption. PwC’s 2025 Annual Corporate Directors Survey found that virtually all industrial products directors expressed concern about geopolitical instability, with trade policy and tariffs identified as the top external barrier to growth. Nearly two-thirds of directors reported that their boards discussed supply chain management at every meeting, yet nearly half said their boards needed to spend more time on the issue.

For directors and officers, the D&O implications of supply chain disruption are multifaceted: failures to adequately disclose supply chain risks, inadequate board oversight of supply chain resilience and the cascading financial impacts of disruption can all give rise to securities claims and derivative litigation.

Litigation risks remain elevated

Civil litigation and third party claims were also identified as meaningful areas of exposure, though they ranked just outside the top tier for North America. According to Cornerstone Research’s Securities Class Action Filings, 2025 Year in Review, plaintiffs filed 207 new securities class actions in 2025, a decline from 226 filings in 2024. However, the overall size of filings increased substantially: Disclosure Dollar Loss surged to a record $694 billion in 2025, up sharply from $429 billion in 2024, while Maximum Dollar Loss rose to $2,862 billion, its third-highest level on record. The median securities class action settlement amount reached $17.3 million, a nearly three-decade high.

Derivative actions continue to be a significant concern for directors and officers and their insurers, with large cash settlements in derivative cases remaining a particular worry, especially as companies may not be able to indemnify for such settlements. It is also worth noting that the decrease in SEC enforcement activity could give rise to a more aggressive plaintiffs’ bar, eager to pursue claims that the SEC may be less inclined to bring under the current administration. These findings indicate that litigation risk remains an important concern relative to cyber, governance and operational risks.

ESG risks: A shifting landscape

Environmental, social and governance (ESG) risks continue to appear among many of the surveyed subjects that ranked in North America, though the relative weight of these concerns is evolving. Health and safety (80%) and systems and controls (72%) represent the social and governance categories that ranked highest, while regulatory breach (68%) also reflects governance concerns.

Notably absent from this year’s top seven is diversity, equity and inclusion, which ranked number seven in 2025 at 54%. This shift likely reflects the continued impact of anti-DEI political pressures in the United States, including the Trump Administration’s executive orders targeting “illegal DEI” and the Department of Justice’s (DOJ) directives to investigate companies maintaining certain DEI policies. The evolving legal and political environment around DEI presents a complex challenge for companies: while federal pressure has intensified against certain DEI practices, many shareholders, employees and customers continue to support diversity initiatives, creating potential liability exposure regardless of the approach a company takes.

Risks in the environmental categories continue to be viewed as less important by North America respondents than those in other global regions. Under the current Administration, the SEC’s climate-related disclosure rules have been effectively abandoned; however, companies should not assume that environmental disclosure obligations have disappeared entirely. California’s climate disclosure laws remain in effect (pending court challenges) and a number of other states — including Illinois, Minnesota, New York and Washington — are considering similar legislation. Moreover, companies doing business in the European Union remain subject to the EU’s sustainability disclosure requirements.

D&O insurance: Board preparedness under scrutiny

The survey also provides insight into directors’ and officers’ insurance priorities and board preparedness. Among North America respondents, claims related considerations – particularly claims control and settlement – were cited as key areas of focus, alongside dispute resolution with insurers, choice of defense counsel and coverage for cyber related claims. This emphasis suggests a strong awareness of how D&O policies perform once a claim arises, rather than an exclusive focus on limits or headline coverage terms.

Globally, respondents expressed strongest confidence in their fellow board directors’ ability to oversee financial performance monitoring and reporting (84%) and purpose and strategy development (80%), while confidence was notably lower for AI (54%), broader sustainability (51%) and climate risk and transition (48%). The low confidence in AI oversight is particularly notable given that AI has surged into the top five risk concerns in North America, suggesting a meaningful gap between perceived risk and board-level readiness to manage that risk.

The survey further found that 33% of respondents globally considered operational resilience to be within the top five issues requiring more time or having greatest materiality to their business, with increased risk exposure (including third-party and supply chain risk) cited as the most concerning aspect of operational resilience at 39%.

Looking ahead

Taken together, the 2026 North America results point to a mature risk environment. Long standing exposures such as cyber risk, governance and health and safety retain a central place in board oversight, while emerging risks – most notably artificial intelligence – are quickly becoming embedded in mainstream board level discussions rather than treated as peripheral or speculative concerns. As the risk environment grows more complex, boards will need to ensure they have the skills, information and governance structures to exercise effective oversight — particularly in areas such as AI and operational resilience, where the survey data suggests that board preparedness may not yet match the magnitude of the risk.

*This article first appeared on the Willis website at https://www.wtwco.com/en-us/insights/2026/07/global-directors-and-officers-survey-report-2026-north-america

In Episode 7 of the D&O Diary Podcast Series, we sat down with Stephen Sills, Founder and CEO of Bowhead Specialty, to discuss the evolution of the D&O insurance marketplace and the lessons Stephen has learned throughout a career spent building, leading, and growing successful insurance organizations.

Few industry leaders have as broad a perspective on the D&O marketplace as Stephen. Drawing on decades of experience across multiple market cycles, he shared his views on how the industry has evolved, the challenges facing underwriters today, and the trends that are likely to shape the market’s future. Our conversation explored the many changes that have transformed the D&O landscape, from shifts in underwriting philosophy and market conditions to the growing role of technology and data-driven decision-making.

Stephen also offered valuable insights into the factors driving today’s market, including the increasing complexity of risk assessment, emerging risks such as artificial intelligence and AI-related litigation, and the ways underwriters are adapting to a rapidly changing environment. In addition, he reflected on the importance of leadership, organizational culture, and talent development in building high-performing and enduring insurance businesses.

For insurance professionals, underwriters, brokers, and industry leaders alike, Stephen’s observations provide a compelling look at where the D&O marketplace has been, where it stands today, and where it may be headed next.

We would like to thank Stephen for joining us and for sharing his experiences and perspectives. We hope you enjoy this latest episode of the D&O Diary Podcast Series.

🎧 Listen now on:

Apple Podcasts: https://podcasts.apple.com/us/podcast/the-d-o-diary-podcast/id1896880954?i=1000789802728

Spotify: https://open.spotify.com/episode/5PjlanMhi3yWXOaLEauyPr?si=IplZQPbqQLKdvBebC-MnWw

📺 Watch on YouTube: https://youtu.be/XVfIzLBwueM

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Artificial intelligence has generated considerable discussion about operational, regulatory, and compliance risks that may translate into D&O underwriting exposure. An August 27, 2026, ruling allowing a securities class action against CVS to proceed highlights a growing source of securities litigation risk arising when AI-enabled business processes materially contribute to financial performance. The Southern District of New York granted in part and denied in part CVS’s motion to dismiss, permitting claims to proceed based on allegations that the company failed to disclose material information regarding the role AI-assisted prior authorization processes allegedly played in generating cost savings and supporting profitability.

Continue Reading The CVS Case and the Emerging D&O Risks of AI-Driven Performance

One of the recurring issues in D&O coverage litigation is whether an individual director or officer was acting in an insured capacity when the conduct that gave rise to a claim occurred. Because directors and officers often serve in multiple roles, as executives, shareholders, investors, lenders, or guarantors, the capacity question can be complex, but the answer can be coverage dispositive.

Continue Reading Eighth Circuit: D&O Policy Does Not Cover Executives’ Personal Loan Guarantees

In a recent decision, the 11th Circuit reversed a lower court’s blockbuster ruling holding that the qui tam provisions of the False Claims Act violate the U.S. Constitution’s Appointments Clause. The appellate court left other key constitutional questions unanswered and remanded the case to the district court for further proceedings, leaving the door open for further judicial consideration of the constitutionality of the qui tam provisions. The Eleventh Circuit’s September 1, 2026, opinion can be found here.

Continue Reading False Claims Act’s Qui Tam Provisions Survive Constitutional Challenge

Over the last several months, the boards of a number of tech companies have been hit with “follow on” shareholder derivative lawsuits, after the companies were first sued in underlying intellectual property suits. The derivative lawsuits allege that the companies’ boards knowingly allowed their companies to use copyrighted materials to train their AI models, resulting in the underlying IP liability litigation, as well as potential IP-related liability. In the following guest post, Nathaniel French and Mason Dressler take a detailed look at the latest of these lawsuits, filed against Apple’s board. Nate is a partner and Mason is an associate at the Kennedys law firm. Our thanks to Nate and Mason for allowing us to publish their article on this site.

Continue Reading Guest Post: Apple Intelligence: Ongoing Risks Associated with AI Development