When considering the purpose of D&O coverage, keep in mind the three basic duties all directors owe to their corporations: - Loyalty — the director must put the interest of the corporation above their own;
- Obedience — the director’s actions must conform to the corporate charter and bylaws;
- Diligence — management of the corporation must be done in an expedient and knowledgeable manner*
One of the best risk management actions you can take to address these issues is to review your current corporate workflows, procedures, and enforcement mechanisms. Are you leaving loopholes that might lead to claims? Do you have procedures on the books that are either being ignored or simply not enforced? Nearly every wrongdoing Enron is accused of was specifically addressed and/or prohibited by an Enron corporate policy or rule. If an employee becomes aware of a potential problem, are they fully aware of (and encouraged to use) the proper channels for reporting the situation to the proper parties? Don’t let the everyday pace of your business lead your directors into actions that could mire your business in the D&O swamps. For more risk management ideas that might keep your path on higher ground, contact our staff professionals today. Contact Us for a convenient time to review your situation and needs. | 
