Duty of Care

INTRODUCTION

In the lead up to the banking crisis of 2008, smart PhDs developed complex formulas that aggregated large volumes of high-risk mortgages and made it seem as if those funds were the next great investment opportunity. They even created a whole new vocabulary, using terms like synthetic derivatives to sound even more clever, while they effectively hid the risks of the subprime mortgage market.

The magnitude of the collapse suggests that many directors were taken in. They must not have really understood what was being done, or they would never have agreed. They ignored the terms they did not understand and trusted the smart people to have fully thought through the strategic and risk implications.

It is human nature to behave as if we understand things when we do not. Responsible boards need to ask more questions to make sure that they understand.

Technology is the next vulnerable frontier. The new mantra for corporate directors needs to be if you cannot explain it so I can understand it, I will not support what you are proposing. You need to explain it so I can understand it. Duty of Care is designed to help.

Case Studies!

Duty of Care gives you case studies … specific examples where a board either really messed up, or they really got it right, with a very clear takeaway from each example:

What the companies that messed up can teach us:

• Yahoo – Boards who ignore cyber-related issues do so at their (share price) peril.
• Equifax – Boards need to demonstrate oversight of ...