New risk management focus: Boards?

Risk management remains a hot buzzword for 2010 (risk management news). And you've got people focused on risk at all levels, from traditional financial areas to the IT level and everything in between.

But there's a new risk that's obvious a lot of executives could miss it: Board risk. Corporate governance has gotten a lot of attention obviously. But the risks these days are enhanced nonetheless by the higher chances of litigation. Shareholder suits may be poised to skyrocket, piggybacking the efforts of regulators to crack down on various industries.

Institutional investors with a litigious bent may well be licking their chops. Cfo.com notes that most of top 100 securities class-action settlements since 1996 have involved "massive corporate-governance failures" and have been accompanied by "tag-along" suits filed against individual directors and executives. Red flags include the weak qualifications of board members and the relationships that board members have with each other.

We've seen a lot of companies, especially big banks like Citigroup and Bank of America, make aggressive moves to re-constitute their boards. Other companies may want to follow in their wake. Be warned.   

For more:
- here's the cfo.com article

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