The New Board Game Blog 5: Propose/Debate/Vote – back in fashion

The New Board Game

How to adapt, behave and relate in the post-pandemic boardroom

Blog 5: Propose/Debate/Vote – back in fashion

  • Time was, on the best boards:
    • board meetings focused on motions which were proposed and seconded
    • debated
    • voted on
    • if you lost your vote, you backed the board’s decision, or you resigned
  • Now, frequently:
    • the board’s agenda is tightly controlled, usually by the CEO
    • motions are not encouraged
    • open debate is as rare a hen’s teeth
    • votes are even rarer
  • Worse:
    • if you challenge “you are not a team player”
    • votes are viewed as a sign of distrust: “if we’re on the one team, why vote?”
    • one-person-one-vote rules are ignored
    • dysfunctional relationships flourish because there’s no process to manage differences
  • But, post-pandemic
    • directors will come under a harsher conduct spotlight
    • they will want to demonstrate that they exercised their rights and performed their duty
    • proposing motions will help them demonstrate their intent
    • winning motions will become their unofficial metric
    • they will want to record their dissent if they don’t resign
    • and watch out for more resignations than in pre-pandemic times
  • Why?
    • because society’s pandemic loans/bailouts come at a cost
    • that cost is that there’s no going back to the old ways
    • you can’t take taxpayers money with one hand and dismiss it by ignoring ESG-based decision-making with the other – until now, that injustice was ignored as “that’s just business”
    • so, when your board experiences a serious risk event that causes societal detriment, your directors will want to show that they tried, much more than previously, because society will demand justice, stridently

Ciarán Fenton

The Post Office scandal – where were the “non-lawyers”? Where weren’t they?

Another day, another corporate scandal – The Post Office – which raises questions, yet again, about the role and purpose of lawyers in society and their part, or not, in these scandals.

Richard Moorhead, professor of law and professional ethics at Exeter Law School, wrote in a blog, rightly uncompromisingly, that the case raised a broad range of professional issues.

“I hope that the BSB and SRA will investigate with all due alacrity not just to see if anyone should be held to account but also for the lessons that can be learned.”

He went on: “Many of the problems here are as much corporate governance problems as legal ethics problems but we should not let that fact drop between the two stools or linger for yet more years.

“If we ask the traditional question of all such scandals, Where were the lawyers? The only response is ‘Where weren’t they? Because they were either at the heart of it or ought to have been. Not solely responsible, of course, but importantly responsible.”

Paul Gilbert, Chief Executive of LBC Wise Counsel, a consultancy which works closely with in-house lawyers has written an open letter which he hopes in-house lawyers will send to their board and Executive colleagues in the light of the scandal. The final two paragraphs are as uncompromising:

“The role of lawyers in any business, including your lawyers in this business, is to protect your interests expertly and fearlessly. However, the role of lawyers can never be just about carrying out the wishes and directions of their employers. At the heart of what all lawyers do is to explicitly and diligently uphold the administration of justice. 

No matter what the business imperatives or the pressure we all feel, we hope you know and welcome that we will not be silent if we need to raise concerns or objections to a decision, policy, behaviours or course of action that undermine our duties as lawyers. 

We are proud to be employed here, and we hope you are proud to support us in fulfilling our role.”

Legal Futures reports that “Paul Harris, senior partner of Edward Fail Bradshaw & Waterson in east London, said only a full statutory inquiry could determine “how and to what extent, if any” the Post Office’s lawyers were responsible for errors or misconduct.

Mr Harris, who also acted for three of the defendants, said: “It is not clear who knew what and when and this in itself requires proper investigation.”

So, it looks like the focus of any review or investigation will, rightly, investigate regulatory breaches by lawyers, if any.

But the reviews must not stop there. They must forensically examine the chain of command linking the lawyers and “non-lawyers” at The Post Office.

They must acknowledge what Professor Stephen Mayson, author of The Independent Review of Legal Services Regulation (2020, S 4.12) called the “inherent tension” between lawyers and their employers.

And in the case of The Post Office their employers, the “non-lawyers”, are set out on the Post Office website:

“ How we run the business

Our Board

Our Board of Directors is chaired by Tim Parker. As Non- Executive Chairman he is independent both of the executive management of Post Office Limited and of its special shareholder. The Board comprises the Chairman, five other Non-Executive Directors and two Executive Directors.

Board responsibilities

The responsibilities of the Board include setting the business’ strategic aims, putting in place the leadership to deliver them, supervising the management of the business and reporting to the shareholder. There are a number of Board committees which deal with specific topics requiring independent oversight including audit, risk and compliance, nominations of the Board, pensions and senior remuneration. Each committee is chaired by a Non-Executive Director and operates within its own agreed, documented Terms of Reference

Our Group Executive

Below main Board level, the Group Executive (GE) is the most senior leadership team which is accountable to the Board for the day-to-day operations of the Post Office. It is made up of the Chief Executive and each of his direct reports together with the Company Secretary and is responsible for delivering performance measured against the corporate objectives set by the Board and agreed with the Post Office Shareholder.”

So where were these “non-lawyers” Where weren’t they?

Where were the NEDs? Where were the corporate governance checks and balances?

Who did the lawyers report to? What performance management system was used in their annual appraisals? Who decided what meetings they were allowed to attend or not? Did they experience ethical pressure? Were they allowed to do their best work? Were they heard?

The SRA will, I suspect rightly say that the Post Office lawyers should have “blown the whistle”, if they knew, because the SRA regulations require them to “act with independence”.

But the SRA knows what everyone knows: the inconvenient truth that in-house lawyers do not have the regulatory support they need to act with independence.

Despite many requests the SRA has not undertaken a Thematic Risk Review of the risks to society regarding the independence of in-house lawyers – and in this case – an appalling miscarriage of justice to individuals.

Had the SRA acted, many years ago when this matter was highlighted for the first time, then perhaps the Post Office lawyers might have been in a much stronger position (and the opportunity for misconduct or error reduced) – reporting directly to the Post Office Chair or SID and/or able to go above their heads to the SRA routinely and not in extremis, perhaps with “Officer of the Court” written into their employment contracts, and their law department regulated as a separate unit, as per the Mayson Report.

These steps might have helped avoid this catastrophe for the wronged and for what was once “a national treasure”.

But we’ll never know, will we?

Will we?

Ciarán Fenton

The New Board Game: Blog 4 Why your NEDs should heed Bob Dylan

The New Board Game

How to adapt, behave and relate in the post-pandemic boardroom

The New Board Game: Blog 4 Why your NEDs should heed Bob Dylan

Are your NEDs out of touch?

⁃ with:

⁃ your board papers?

⁃ do they read them, all, at all?

⁃ their purpose as NEDs?

⁃ which is NO different to your EDs

⁃ or do they feel that’s not “the real world”

⁃ that, c’mon, NEDs have influence

⁃ not real power

⁃ no point in proposing motions

⁃ nor calling for votes

⁃ nor calling out poor behaviour by your Chair/CXOs

⁃ ‘cos the Chair is their boss

⁃ not the Companies Acts

⁃ not the Codes & Principles

⁃ not FRC, QCA, Wates

⁃ not these

⁃ excellent law & codes, for sure

⁃ but toothless

⁃ just tick the boxes in your Board Evaluation

⁃ and have a nice glossy section on Governance in your Annual Report

– nothing will change

⁃ because no one has an incentive to change

⁃ and the good NEDs, who know how “to NED” remain in the minority

⁃ but alert NEDs know that society is changing

⁃ by #metoo #BLM

⁃ by #ESG

⁃ by the pandemic

⁃ by furlough

⁃ by COVID loans

⁃ by case law

⁃ watch as NEDs resign as their behaviour comes under scrutiny

⁃ As Bob said:

Come gather ‘round people

Wherever you roam

And admit that the waters

Around you have grown

And accept it that soon

You’ll be drenched to the bone

If your time to you is worth savin’

And you better start swimmin’

Or you’ll sink like a stone

For the times they are a-changin’

Ciarán Fenton

The New Board Game – Blog 3: Is your board disconnected?

The New Board Game

How to adapt, behave and relate in the post-pandemic boardroom

Blog 3: Is your board disconnected?

⁃ A bullying CEO/Chair rules the roost

– a brutal CXO enforcer/attack dog/lap dog

⁃ Minutes decided before meetings

⁃ No calling out of unacceptable behaviour

⁃ No challenge on dodgy decisions

⁃ Decisions stitched up without debate

⁃ Lawyers ignored

⁃ Shaming and humiliation – the norm

⁃ Exclusive focus on the bottom line/the numbers/quarterly statement

⁃ People viewed as human resources, capital assets, “ours”

⁃ Shareholder returns, investor “exits”, LTIPs driving behaviour

⁃ Barely concealed misogyny

⁃ Open racism: D&I a chore

⁃ Families irrelevant

⁃ Stress, fatigue, burn-out: a badge of honour

⁃ Fear & anxiety constant companions

⁃ Sleepless nights before and (worse) after board meetings

⁃ Sleights, real and imagined, dominate

⁃ Personality feuds fed

⁃ Schadenfreude ever present

⁃ Emails and texts micro-examined

⁃ wtf did he mean by that ellipsis…?

⁃ And it’s all multiplied 100x on Zoom

⁃ The pandemic has hit our P&L, badly

⁃ Saved only by furlough – phew, but of course, there’s the rub.

⁃ The seeds of societal disruption visiting a boardroom near you…

Ciarán Fenton

The New Board Game Blog 2: Less profit, more impact

The New Board Game

How to adapt, behave, and relate in the post-pandemic boardroom

Your board will need to focus on making less money

  • a bit shocking that, isn’t it?
  • I mean, maximising profit has been the mantra of boards forever. How could this possibly change?
  • The system is geared towards a laser focus on the bottom line: incentives, bonuses, options
  • The markets keep score based on valuations based on profit
  • Investors want an exit at the highest return
  • Even the most pro-ESG commentators link “doing good” with the logic that it will drive higher profit
  • ESG is good for business, don’t they say?

It’s all tosh.

If there was money in ESG, everyone would be “at it” already

  • taking care of the environment, properly, costs money
  • The E in ESG will hit your P&L
  • paying/hiring/treating employees equally, fairly, and inclusively costs money
  • The S in ESG will hit your P&L
  • good governance costs money because doing the wrong thing makes people very rich
  • The G in ESG will hit your P&L
  • if your profitability improves because of these costs – it may/may not – that will be a collateral benefit/cost of ESG and not a business case

ESG doesn’t need a business case, so stop making one

  • You don’t make a business case for an elevator in your office block, do you?
  • You don’t make a business case for wifi, do you?
  • You don’t make a business case for maternity/paternity leave, do you?
  • Protecting the environment is becoming no longer optional for boards
  • Nor is protecting society any longer a buy/don’t buy decision
  • Nor is good governance an a la carte exercise.

There will be a new heading in your P&L narrative: impact of ESG costs on profit and reputation. Are you ready for those conversations in your boardroom?

Ciarán Fenton

The New Board Game: Blog 1 – What’s new?

The New Board Game

How to adapt, behave and relate in the post-pandemic boardroom

Blog 1 – What’s new?

Nothing, fundamentally, you could argue.

– the scorekeeping is the same

– the FTSE, NYSE, DAX etc. haven’t changed their calculus a jot

– accounting rules remain, largely, unchanged

– EBITDA means the same now as it did before the pandemic

– Ditto ROI

– company law is broadly the same

– so, boardroom behaviour in regard to these factors hasn’t had to change.

– Why would it?

– what’s measured continues to be delivered

But the context has changed, irrevocably

– the ESG wagons were rolling long before the pandemic, now they’re picking up speed because of it

– impact investing, green-washed or not, has notched trillions

– companies that take state aid and ignore the environment, society and governance issues are attracting the spotlight

– state bailouts have scotched the notion that business is somehow apart from the state and society

– gladiators of capitalism – The Financial Times, Larry Fink, The Business Roundtable etc. are all talking about relaunching capitalism

– young people are, to use an Americanism, seriously pissed with corporate behaviour

– above all, customers, employees and supply chains are demanding change.

If you are a member of a board – main or management – or aspiring to be one, then you have a choice: either you wait for the game and it’s rules to change officially or you decide that the game has already changed and the rules will catch up in due course and you start to adapt your behaviour to the new game now, or not.

Ciarán Fenton

Counterfactual: the FRC Code and @IRLSR S4.12 together prevent the collapse of Carillion

Carillion is in the news again. Not that it ever was, or ever will be, fully out of the news because it will never be forgotten.

It’s in the news because:

The UK’s financial regulator has said it is planning to take action against former directors of Carillion, almost three years after the government contractor collapsed under £7bn of liabilities, leaving taxpayers to pick up the pieces.

On Friday, the Financial Conduct Authority announced that it had issued warning notices to the company itself and to “certain previous executive directors” over a series of breaches of financial rules before the business failed. 

These include giving “false or misleading signals as to the value of its shares”, “failing to take reasonable care to ensure that its announcements were not misleading, false or deceptive”, and “failing to take reasonable steps to establish and maintain adequate procedures, systems and controls”.

Financial Times 13 November 2020

It will never be forgotten in the history of corporate collapses because its demise was wholly a function of conduct – behaviour over time:

Carillion’s rise and spectacular fall was a story of recklessness, hubris and greed. Its business model was a relentless dash for cash, driven by acquisitions, rising debt, expansion into new markets and exploitation of suppliers. It presented accounts that misrepresented the reality of the business, and increased its dividend every year, come what may. Long term obligations, such as adequately funding its pension schemes, were treated with contempt. Even as the company very publicly began to unravel, the board was concerned with increasing and protecting generous executive bonuses. Carillion was unsustainable. The mystery is not that it collapsed, but that it lasted so long.

House of Commons Joint Committee Report 9 May 2018

In July 2018 the FRC published its updated Corporate Governance Code, the first three Principles are set out as follows:

Financial Reporting Council
A. A successful company is led by an effective and entrepreneurial board, whose role is to promote the long-term sustainable success of the company, generating value for shareholders and contributing to wider society.
B. The board should establish the company’s purpose, values and strategy, and satisfy itself that these and its culture are aligned. All directors must act with integrity, lead by example and
promote the desired culture.
C. The board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them. The board should also establish a framework of prudent and effective controls, which enable risk to be assessed and managed.

FRC Corporate Governance Code July 2018 (the Code)

In June 2020 The Centre for Ethics & Law, University College London published its Final Report of the Independent Review of Legal Services Regulation written by Professor Stephen Mayson in which he recommended:

Recommendation 20 (page 151): An in-house legal department should be capable, for regulatory purposes, of being registered as a distinct business unit, so that the department’s delivery of legal services would be subject to the same regulatory obligations as any other registered provider. Individuals within such a registered in-house unit should also be registered personally if they carry on activities for which before-the-event authorisation or personal accreditation would otherwise be required.

Final Report of the Independent Review of Legal Services Regulation June 2020

Professor Mayson set out his reasons for this Recommendation as follows:

There is little doubt that a tension is inherent in this relationship when the client for legal services is also the adviser’s employer. The usual expectation of ‘independent’ legal advice is often stretched … arguable that those with professional obligations might benefit from further regulatory support… In principle, they should not be at risk of dismissal or disadvantage simply for observing their professional obligations … This might entail express conditions in their employment contract, and a direct reporting line to the Board … As we have seen in recent years, corporate failures can lead to consumer and societal detriment. In-house lawyers have to be able to sound alarm bells without the chilling effect of potential reprisal.

Section 4.12

Furthermore, and of particular relevance to the Carillion case, he goes on to point out that:

…I agree with a submission in response to the interim report that we should not presume that “corporate governance alone is sufficient to address the public interest – there will be times when general counsel need recourse beyond their board, to their regulator (e.g. when the concerns derive from, or are perpetuated by, behaviour at board level)”.

Section 4.12

What if the the Code and Recommendation 20 of the IRLSR had been in force and enforced, with criminal prosecution consequences for breach, over many years prior to the collapse of Carillion? Here’s my guess:

  • Fear of prosecution relating to breaches of the Code would have prevented the creation of a decision-making culture that led to the more reckless conduct of the Board
  • Carillion’s in-house lawyers (in respect of whom the HOC Report is silent) would have been in a position when the early signs of reckless conduct presented themselves to reach “beyond their board and, to their regulator (e.g. when the concerns derive from, or are perpetuated by, behaviour at board level)” and which recourse would have acted as a brake on that behaviour. I don’t accept the point, often made, that this would mean that all companies would stop employing in-house lawyers. If some did , would that not be a statement about them?
  • The lives and pensions of thousands would have been protected, the taxpayer saved millions, and trust in boards, lawyers, regulators and politicians to protect wider society would not have been tarnished so irreparably.

But that’s the counterfactual.

The current reality is that the Code is an excellent framework, but without criminal sanction to back it up, it won’t prevent another Carillion. Nor, even worse, will the current regulatory framework under which in-house lawyers function.

Sadly, there appears to be little appetite in parliament, boards, the legal profession and the SRA to grasp this nettle.

I have written extensively on this subject in the current edition of the Modern Lawyer quarterly journal, edited by Catherine McGregor and published by Globe Law & Business, in a long read entitled: Inherent tension in-house: defusing the law department time bomb at a time of pandemic. I have spare copies. Email me at with your postal address if you would like a copy.

Meanwhile, there is light at the end of this bleak tunnel: the pandemic and the ESG movement will create an environment in which parliament, boards, the legal profession and regulators will be forced by society, including employees, customers and suppliers through social media, to prevent another Carillion because the price of the furlough schemes and COVID-19 Financing will be much better conduct.

Much better, or else.

Ciarán Fenton

The IICSA Report on the Catholic Church and The Carillion Report share identical lessons: protecting society is a legal requirement, not a work in progress

Last night I downloaded the Independent Inquiry into Child Sexual Abuse Report on The Roman Catholic Church and scrolled through its 150 pages or so with mounting horror. Not that any of it was a surprise but, somehow, seeing it all set out in a formal ‘report format’ was as shocking as it was surprisingly reassuring.

I had a similar feeling when, in 2018, I downloaded the Select Committee Report into the collapse of Carillion.

Both reports investigated organisational conduct risk events which lead to societal detriment on a scale which beggars belief.

The victims of sexual abuse will struggle to recover. The lives of the victims of the financial collapse were blighted irreparably.

Both reports highlight identical leadership, governance and decision-making failures.

Principles, Provisions & Frameworks were clearly no bulwark against raw power at the top of these organisations

Both reports refer to ‘progress’ made by various commissions and reports.

The Catholic Church held at least three internal reviews since 2000. The business community has reviewed itself to death since the global financial crash in 2008. For sure, ‘progress’ was made and there was a welcome new focus on ‘purpose’.

But failure in defending its moral purpose is at the core of the IICSA Report. And failure in its purpose to protect wider society was at the heart of the Carillion Report.

When it comes to ‘safeguarding’ society, claiming progress is an admission of failure.

Progress in protecting society is not acceptable. We either protect society or we don’t.

Claiming progress is a cop out. It’s a fig leaf for protecting the raw power that keeps those who fail to lead in their positions of power.

The truth is that the sexual abuse in the Catholic Church was avoidable and those involved know it.

Equally the collapse of Carillion was avoidable and those involved know that too.

Three things would have prevented these human catastrophes:

– Enforced laws

– Enforced governance

– Good leadership

These three elements were missing in both cases and, sadly and indeed horrifically, nothing will change until they are ubiquitous.

Ciarán Fenton

3 Steps to check Trumpian behaviour on your board

One of President Turmp’s enduring legacies will be his contribution of an new adjective to the modern dictionary:

Trumpian is an adjective form for President Donald Trump. The term is especially used by critics to characterize his language, conduct, and policies.

The word will endure because no one needs to work hard to figure our what it means.

His language is coarse and bullying.

His conduct, defined as behaviour over time, is bullying.

His policies, save those that are mainstream Republican, are bullying and racist.

President Donald Trump is, based on the evidence available, a narcissistic bully.

While he may appear an extreme example of that personality type. He isn’t. It’s an illusion afforded by the unique and awesome power of his office.

For, this very morning, just a few days after the Trump regime was toppled, Trump-like CEOs, CXOs and NEDs in organisations all over the world are preparing today to make the lives of those around them miserable, their organisations wholly dependent on their whims and success by any measure short-term, at best.

We all know these narcissistic bullies by name. We can cite their unacceptable behaviour by rote behind closed doors, in pubs and at dinner parties.

But we are all experts in Trumpian behaviour because few of us reach the boardroom, or near it, without experiencing it and/or doling it out.

We are all narcissists. We each sit somewhere on its behavioural scale:

• Become impatient or angry when they don’t receive special treatment
• Have significant interpersonal problems and easily feel slighted
• React with rage or contempt and try to belittle the other person to make themselves appear superior
• Have difficulty regulating emotions and behavior
• Experience major problems dealing with stress and adapting to change
• Feel depressed and moody because they fall short of perfection
• Have secret feelings of insecurity, shame, vulnerability and humiliation

I’ll put my hand up to some of these, at times. Will you? If not, you may well be part of the problem and not the solution.

Three steps

Step 1

The first step to check Trumpian behaviour on your board is to embrace emotional intelligence (EQ/EI) as core to your board’s behavioural strategy. This is simply a matter of passing a resolution to do so.

No director should be forgiven for not knowing the core principles of EQ. These are set out in management books, articles and podcasts in one form or another and have been for years. No excuse.

Step 2

The second step is to focus on the three EQ principles most likely, in my view, to lead to behaviour change: develop empathy and self awareness and find a way to negotiate your needs productively.

It’s the latter principle which trips up Trumpian narcissists. They do not believe that they can have their needs met without bullying behaviour.

The experts tell us that the etymology lies in their formative years, frequently brutal.

Mr Trump, and indeed his emotional bedfellow Mr Johnson, had sadly brutal formative years. Recovery from these is available through psychotherapy.

But recovery from formative years’ trauma must be sought out by the sufferer driven by their unhappiness.

Few doubt that Mr Trump and Mr Johnson are unhappy – both appear not to enjoy their day-jobs. But while it’s unlikely they will seek help it is highly likely for those struggling readers of this piece to find more fulfilling outcomes through psychotherapy. I have.

Step 3

The third step is to ensure that your board complies with the behavioural principles and provisions in whatever corporate governance code you use – FRC, QCA or Wates.

Each of these frameworks offers an existing bulwark against Trumpian behaviour on your board. All you have to do is to use it.

Finally, even President Elect Biden expressed himself surprised at the outpouring of joy on the streets of the USA after his election.

He shouldn’t be. We all know the feeling: it’s when the teacher came back into the room and some child was saved from a beating or taunting by the class thug; it’s when that hubristic priest/bishop/cardinal/ is called to book for crimes, or facilitating crimes, unspeakable; it’s when that boss who feeds on your abject humiliation trips up and is fired.

Noteworthy that Mr Biden’s first act was to publish on his transition website an ethical framework.

Let’s hope he sticks to it.

More than that, let’s hold him to it but also help him do so. He too is fallible.

But none of us have to endure Trumpian thuggery.

We won’t.

They can count on it.

Principle C of the FRC Code should generate “creative” tension between the board, Finance, Legal, Risk and Compliance

Principle C of the FRC Corporate Governance Code 2018 (the Code) states:

The board should ensure that the necessary resources are in place for the company to meet its objectives and measure performance against them. The board should also establish a framework of prudent and effective controls, which enable risk to be assessed and managed.

FRC Corporate Governance Code 2018

The word ensure is unambiguous. It means that the board must to put in place the resources necessary to achieve its objectives.

This puts the ball in the CFO’s court.

But neither the words objectives, goals nor any other synonym are defined in the Code save the implied definition that the board’s objectives and/or goals are contained within its purpose, values and strategy statements “aligned” with its culture (Principle B) in order to “promote the long-term sustainable success of the company, generating value for shareholders and contributing to wider society.” (Principle A)

It follows that to comply with the Code the board, through the CFO, must ensure that the necessary resources are in place to comply with Principles A & B.

So, using my working example – GSK’s Annual Report 2019 – GSK’s CFO would be required to ensure, for example, that the necessary resources are in place to improve the “quality of life” (its stated purpose) of its customers, to “promote long-term sustainable success” and to “contribute” to wider society.

How do you evaluate all of that accurately, let alone report it?

In particular how do you evaluate contribution to wider society in advance and how do you budget the ‘necessary resources’ to achieve that contribution?

The second sentence in Principle C is about establishing a risk framework which, one assumes, includes both business and legal risk.

That means the GC’s legal risk register must identify top and emerging risks that threaten purpose, strategy, values, culture, etc. and must have the necessary resources in place to mitigate those risks and, in theory, the CFO must satisfy the GC that the resources are in place to do so. Good luck with that.

Turf wars between Finance, Legal, Risk and Compliance in respect of the issues above functions are common place. Some are legendary. I suspect none of these dramas are reflected in Annual Reports.

For example, one of the chief risks on any risk register which is likely to threaten the ‘long-term sustainable success” of a company is conduct risk. The long list of corporate failures in recent memory resulting from conduct risk events are testimony to the reality of those risks.

Conduct is defined as behaviour over time. Board behaviour is comprehensively addressed in the Code. It follows that a board evaluation should address the behaviour of the board in relation to conduct risk. Good luck with that, too.

In summary, Principle C of the Code is an evaluation and reporting minefield which the accompanying Guidance doesn’t fully address but it is nevertheless an excellent framework for private discussions on relevant ‘matters arising’ which could mitigate significant risks if boards have the courage to have those discussions.

Ciarán Fenton