Since the insurance crisis of the mid-1980s, companies of all sizes have given increased attention to the appropriateness of alternative methods to finance director and officer (“D&O”) liability risks. D&O risk financing alternatives create unique legal issues not applicable to financing alternatives in respect to other types of risks. Before adopting a D&O funding alternative that either replaces or supplements traditional D&O insurance coverage, a corporation must carefully analyze those unique issues and identify the advantages and, more importantly, the limitations to that funding alternative.