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Managing people-related risks: A strategic imperative for private companies

Workforce management and talent retention are evolving challenges for private firms. Addressing these risks is vital for growth and asset protection.

06/26/2025 · 4 minute read

Workforce management, talent retention, and organizational culture are in a constant state of evolution, influenced by both company-specific and external factors. For private companies like you, monitoring these shifting risks and addressing them effectively is crucial not only for fueling growth and success, but also for safeguarding your company’s balance sheet and executives’ personal assets against a range of potential claims.

A company’s growth and operational success heavily depend on attracting and retaining the right talent, which must adapt to the business’ evolving needs. However, poor decisions — such as those related to hiring or layoffs — can lead to claims that jeopardize both the business and the personal assets of executives.

Given the wide array of challenges, it is essential to thoroughly understand your people-related risks and implement strategies to help mitigate them. Moreover, securing appropriate directors and officers liability (D&O) coverage, that may also include employment practices liability (EPL) insurance, is vital for effective protection.

Understanding people risks

As you grow your business, your risk exposures also evolve, presenting numerous and diverse challenges that can significantly impact your operations and success. To maintain your planned growth trajectory, your business requires skilled talent.

This, however, can be particularly difficult in a competitive job market, where employees at all levels may be lured away by rival firms. Amidst fierce competition for skilled professionals, companies that fail to create an engaging and supportive work environment risk losing their top talent to competitors. Further, such disruptions can result in a loss of institutional knowledge and expertise that can then impact operations, reputation, and financial stability.

As private companies grow and adopt more formalized structures and processes — sometimes to align with external expectations — maintaining the company culture that initially attracted employees to the firm, and which they would have become used to, can become difficult. This may lead to employees feeling disconnected from the company’s mission and values, potentially adversely affecting morale and productivity. Poor employee relations can lead to a toxic workplace culture, which could contribute to increased absenteeism and higher turnover rates, potentially leading to higher recruitment costs.

Addressing these risks necessitates a comprehensive investment in employee development and the cultivation of a positive workplace culture, in addition to offering competitive compensation packages. Promoting open communication and encouraging collaboration can help identify challenges early and foster an environment where employees feel valued and engaged.

Navigating talent management challenges

In this dynamic and high-stakes environment, poor decisions can lead to a brain drain that adversely affects the organization’s growth trajectory. Simultaneously, mismanagement of changing people risks can expose your company and executives to claims arising from employee disputes, allegations of discrimination, or wrongful terminations. Hiring processes may also come under scrutiny and any perceived missteps can result in claims, which, even if they do not ultimately lead to financial losses, may cause significant reputational damage.

Considering the potential threats to their personal assets, without a well-structured D&O policy, private companies may struggle to attract and retain the executive team necessary to help the business grow.

It is also important to recognize that as private companies expand, they may encounter increased exclusions in their D&O policy, highlighting the need for regular reviews to identify any gaps.

As your company’s risk profile changes, you must remain vigilant in identifying and addressing people-related risks, investing in talent retention, and fostering a positive workplace culture. A comprehensive D&O policy can provide added security for executives, while reinforcing the company’s commitment to responsible governance and risk management.

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Deepak Adappa

Deepak Adappa

Managing Director, FINPRO

  • United States

William Fahey

William Fahey

Private Company D&O Product Leader, FINPRO

  • United States

Ruth Kochenderfer

Ruth Kochenderfer

D&O Product Leader

  • United States

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