Against a backdrop of slowing growth, rising interest rates and tightened liquidity, corporate insolvencies are on the rise. Australia saw a year-on-year jump of 34.2% in the first half of 20251, while New Zealand’s business insolvencies surged to its highest level in 15 years.2 Directors and officers are operating in a risk environment where economic loss can rapidly evolve into insolvency risk. In addition to balance-sheet challenges, this environment intensifies fiduciary duties, invites heightened regulatory and creditor scrutiny and increases personal exposure for management decisions made under pressure.
In this article, we explore some of the key exposures faced by directors during economic stress, when to look out for…