There are many risks to a fledgeling company, and they don't really go away even if the company booms and blosoms into the fortune 500s. One of the many risks is liability of the general staff of the company, namely when one of the employees does something that is directly or indirectly harmful to customers or the company itself. When this is the case and there is evidence pointing to the fact a company and its owner must take on the task of detaching the company's ideals and reputation from the specific individual while also taking care of any legal trouble that the company needs to deal with, and this is where insurance comes in. There is a wide variety of insurance types that are meant to protect one's company from any possible human error that might occur during a standard work day.
A specific type of insurance that many companies don't have in place is officers and directors insurance, this type of insurance covers the liability of company managers which is meant to protect them from any allegations and claims of wrongdoing. This could arise fromt the decisions and actions taken on the part of the manager, a D&O policy is to provide financial protection for managers against the consequences of actualy or alleged "wrongful acts" when acting in the scope of their managerial duties. The policy also has to cover the cost of court cases, and due to the risks that the company might face during the process will also cover for public relations expensise and the bail bond for the defendant should they be found guilty of wrongdoing. The court case itself namely the costs of defending the accused manager, director or officer from the allegations and the prosecution.
Depending on which company you get the officers and directors insurance from, they could also provide professional advice on what course of action the company should take. They should also be personalized to your specific situation and the insurance company should have a hands on approach to the entire situation (since they are covering all the costs). A number of different insurance companies offer more policies with their insurance so before tying your company down to one you should do some research on which one is the best possible option. However, the possibility that the manager, director or officer has actually done something neglegent and illegal which the business owner should take into consideration when making decisions.
