The growing pressure associated with regulatory compliance is one thing - the increasing risk of litigation is another issue altogether. And insurance specialist Lloyd's suggests businesses could be facing a future liability crisis if they do not face up to growing litigation issues.

One significant impact of the growing threat of liability is that many firms are becoming increasingly risk-averse. Such risk aversion is likely to stifle innovation - which is just what the IT director needs, as he or she attempts to find project funding during the credit crunch.

The research from Lloyd's reveals there is a growing concern among business leaders about the rise of a US-style compensation culture in Europe. IT directors should not that advances in technology and the increasing requirements of corporate governance are particular concerns for the business:

"Shareholder activism is on the rise and a complex operating environment and new legislation serves to increase risks further. An increase in litigation and the fear of potential liability issues is impacting customers through a rise in the cost of products and services and also stifling risk-taking amongst boards who are missing out on new opportunities," says chairman of Lloyd’s Lord Levene, in response to the research findings.

Key findings from the Lloyd's survey include:

• Two thirds of European business leaders expect to spend more time on litigation-related issues over the next three years
• Thirty-nice per cent expect the growing risk of litigation to increase the cost of their products and services, and stifle risk-taking during the next three years
• Over half of all business leaders believe a US-style compensation culture is spreading in Europe and Asia
• Two in three business leaders believe the scale of liability claims arising from the credit crunch will exceed claims arising from the dot com crash
• Boards particularly fear future liability issues arising from advances in technology, environmental damage and corporate governance

Further information on the Lloyd's report can be found here: Directors in the Dock - is business facing a liability crisis?

Further reading

• The CIO must act now to prevent project lethargy
• How can the CIO gain respect for IT innovation?
• Making best use of Gartner's reports
• CIOs will need to transform to survive
• Modernise to beat IT and skills obsolesence

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Want to contact the writer? Email Mark Samuels