Is director liability increasing?
Directors and management are both coming under fire by the SEC, shareholders, depositors, advocacy groups, regulators, the courts, D&O underwriters, the press, and lawyers. During the S&L crisis in the early nineties, there was a lag time between the apex of the crisis and the lawsuits that were filed later. Most industry observers expect the same lag to occur in the current financial environment. Assuming that is so — which is a prudent assumption to make — the bank must follow the advice of counsel and protect itself with good faith forward planning, including stress testing and risk management of the kind Invictus offers. When it comes to directors, a failure to set acceptable levels of risk and authorize the use of the analytical tools needed to manage it have become fodder for critics and litigants. National accounting firms and leading bank counsel contend that risk management is of critical importance to all banks’ sustainability. As a result, risk committees are arguably the mo
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