Because insurance is not enough…
Office of the Board – The Risk Intelligent Framework
Before the digital age Boards operated in an analog, in person, central and conforming way. They worked within a strict framework; regularly met in person, at a specified location typically a boardroom, communications were limited to in person or over the phone, few memos or letters were used to document Board business, communications and documents were not transported over an Internet but rather were exchanged by hand and kept only in physical files at a known location. Board meetings were accompanied by formal Agendas, Minutes and other documents that were reviewed and modified in a way so that all drafts and communications were not available. The final document(s) was the only legal representation of the Board; otherwise, the thought process, views and opinions leading up to the Board’s conclusions were no longer debatable nor discoverable.
With the advent of the digital age Boards operate in a much different environment. Technology has provided us with digital tools that accomplish an even greater degree of mind sharing through the use of email, file sharing, etc. The ease in which we can now share our views and opinions is unprecedented. Unconsciously, and many times without mindful consideration, we share our thoughts and opinions quickly and openly among our colleagues due to the efficiency and convenience that the digital age has facilitated. Every thought, view and opinion becomes encapsulated in digital breadcrumbs that are easily discoverable. The ability to take these bits and pieces of perspective out of context is unparalleled. This change has created new risks and associated liabilities that the analog framework was never designed to protect against. Boards and their members have become exposed to risks and associated liabilities at an unprecedented level in today’s society.
As we use technology to transact our lives we typically operate within at least one if not two frameworks, our personal and our business. This distinction comes naturally as we have been conditioned to keep our personal lives separate and distinct from our work. As an example, we typically have a work email and a personal email.
So, what happens when you decide to become a Board Member? Board Members of any entity, public or private, small or large, for profit or not-for-profit, have fiduciary and legal responsibilities that are subject to inspection, scrutiny and lawsuits and require their own separate framework. As you would never co-mingle your personal life with your work or business nor should you do so with your Board responsibilities. You must insure that the Board you serve on has the appropriate framework in place to support the management, communication and collaboration needs of the entity you serve.
So how do you easily and safely, protect yourself from these newly acquired liabilities? Yes, there are financial insurance products such as Directors and Officers (D&O) insurance that were designed in a less transparent time when claims were easier to defend. Insurance companies have recognized the deficiencies inherent in this legacy product and are quickly adjusting to today’s ultra-transparent world by increasing premiums and deductibles and shrinking coverages. Additionally policies have become laden with caveats and exclusions. Insurance companies will be the first to tell you the digital world has changed the game and financial insurance alone is just not enough. In today’s world you need to proactively manage your risk and associated liability.
Risk and Liability
Boards that continue to operate and govern without a digital framework are finding it virtually impossible to adequately mitigate risk and liability exposures. It is not uncommon to find Board emails and other Board documents commingled with a Board Member’s personal and work emails and documents. This practice exposes personal and work email accounts, computers and electronic devices to scrutiny both during and after each Board Member’s tenure. Add in committee members, managers, lawyers, accountants and other professionals and the exposure grows exponentially./span>
Without a digital framework, when Board Members or others who serve the entity leave, many of the Board’s records leave with them. This not only leads to lack of continuity and preservation of a historical record, but also, when one Board Member leaves the next one has to try to recreate the record, rather than picking up where his predecessor left off.
This unforeseen consequence of today’s digital age is translating into serious liabilities both personal and financial.
- During the last 10 years, 64% of all Nonprofits have had a claim. More than the Private and Public sectors combined. Contradicting popular opinion that claim activity is a public company phenomenon.
- Average cost of a settlement is $28,000.
- Average legal cost of defending a claim $35,000.
- One in every 10 claims costs more than $100,000.
- In the last 12 months 41% of Nonprofit/Private organizations have experienced an increase in D&O insurance premiums.
Efficiency and Utility
Office of the Board provides an operating framework to support the Board’s management, communication and collaboration needs. Instantaneously, Board members are provided with a systematically customized entity email account, a document management system with folders jurisdictionally tailored to your entity, a Board-centric calendar and contacts system, features for Board discussion, documentation, voting, e-signing, the ability to consult with Board Members outside of your Board and other relevant features. All of these resources are securely contained within a customized patent-pending Risk Intelligent Framework that is accessible by permitted members of your Board and the people who work with them whenever and wherever convenient for them.
Board information can be created, managed and maintained within the Framework for as long as required. Permitted Board Members and others can securely access information that is needed to satisfy their obligations and responsibilities. Even third parties can be given one-time secure and restricted access to specific information. No more searching for necessary information or relying upon others before obligations and responsibilities can be met. Board members and others may come and go but the information will remain with the entity and controlled by the Framework.
Whether the Board Members and others working with them should have email, document management, a calendar, contacts, publisher and other features and resources, is totally within your control. The Board administrator has access to all features so you’ll be able to decide whether all members should have every feature or just some of them. With a novel daily billing system users are afforded the best cost without compromise to security. When members change, you can turn features off for the outgoing member and on for new members. The Office of the Board preserves the historical record and continuity in transitions. New members can pick up exactly where the outgoing members left off.