My congratulations to my good friend, Jim Deloach, and to James Lam for their contributions to Board Risk Oversight in the Age of Disruption, published by the (US) National Association of Corporate Directors (NACD).
The article captures some of the content of an NACD webinar that was hosted by Protiviti with James Lam as a speaker.
I like these points:
- Directors’ duty of care and duty of loyalty, as well as the business judgment rule, have provided a long-standing framework for how boards engage management on important matters. More recently, case law has provided greater specificity regarding the board’s fiduciary duties with respect to risk and compliance oversight. Based on several Delaware court rulings (e.g., Marchand v. Barnhill, In re Clovis Oncology, In re The Boeing Co.), James Lam recommended that corporate directors ensure that a risk and compliance monitoring system is in place, the system is performing as intended, red flags and risk metrics around mission-critical risks are being escalated and reported, and management is being held accountable for these mission-critical risks.
- Risk oversight is not just a committee responsibility but is a full board responsibility. Each committee has a responsibility for risk oversight to the extent that risks are inherent in their respective chartered…
