Over this past year, I have had numerous calls and virtual meetings with Boards and individual directors concerning the recent cases (summarized here) involving the scope of the duty of oversight and what they can do to ensure they fulfill those duties. While there is no easy answer, there are several steps boards can and should be taking to reduce the possibility of these types of claims, and the first step should be conducting a entity-wide risk-assessment with a particular focus on industry-specific risks.
With the courts showing a willingness to sustain these kinds of claims at least under certain circumstances, and with plaintiffs’ lawyers showing an increased willingness to assert these kinds of claims, the question arises of what companies can do to try to protect themselves.
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