The Women Corporate Directors (WCD) held a breakfast seminar to
discuss Management Liability and the consequent protection
mechanisms available to directors and officers.
The seminar included female directors and officers from across
industries conversing and sharing best practices, and challenges on
management liability. The vision of WCD is to be a vehicle to share
global and local board experiences, best practices, thought
leadership and debate issues faced by directors in a safe
The seminar focussed on an overview of the Companies Act, risk
mitigation mechanisms and strategies for directors and prescribed
officers and Directors and Officers Liability Insurance (D&O).
Tshidi Mokgabudi, Chairman WCD and Chairman of KPMG Advisory, says
"Given the risk management issues experienced by boards
globally, we chose a Management Liability and protection mechanism
for directors, as a topic to be dialogued at this event."
Directors are continuously faced with huge personal risks.
External factors such as global economic turmoil, hyper-regulation,
undisputed focus on corporate governance, an increase in
stakeholder awareness, the explosion of social networking and an
increase in regulatory claims impact on the role of directors both
locally and abroad.
Keynote speaker Teri Solomon, Management Liability Executive at
Marsh Africa says, "As directors, we are expected to know and
understand a plethora of legislations and how it affects ourselves
and our companies."
"However, the question remains as to how directors can
mitigate risks, given the complexity of these legislations and the
environment?" says Mokgabudi.
Risk management is the ultimate protection mechanism. Solomon
says, "A robust and well documented risk plan, effective risk
management practices through recognised frameworks which are
regularly monitored and tested will be useful mitigatatory
evidence. The board must be able to show how effective the risk
management process was and evidence how it may have operated in the
She goes on to explain that the effectiveness of the risk
management process is critical and the way risk is disclosed to
stakeholders must receive specific attention.
On another note the Companies Act does provide some important
protection mechanisms for directors and officers facing personal
lawsuits. The Business Judgement Rule, limited indemnity by the
company and the provision for the company to secure D&O
insurance for its directors and officers are all welcomed forms of
protection. Solomon stressed how D&O insurance remains a
critical asset protection for both the directors and officers, and
Solomon says, "It will be essential for boards to set the
company's directors and officers strategy, ensuring they are
adequately protected both in scope and value of cover."
Dr Moretlo Molefi, a WCD member and a director at Telemedicine
Africa (Pty) Ltd, asked how you protect yourself from the
subsidiary company risk if you are on the board of directors of the
holding company. Other questions raised by the audience were how to
structure a policy to mitigate the benefits, as directors are we
asking the right questions, and are we addressing risk management
at the right level.
Solomon concludes, "Being a director is about weighing up
the risk versus the reward. Understanding the consequences and
repercussions of your decisions is critical. We must also never be
afraid to seek independent advice on matters we are not sure
Supporting Solomon's comments, Mokgabudi adds, "The
board needs to assess the risks and understand the consequences and
repercussions of their decisions and most importantly we need to
seek external advice where appropriate."
KPMG under the direction of Tshidi Mokgabudi, chairman of WCD
SA, is proud to be a founding sponsor of WCD, building on their
legacy of having been instrumental in launching this unique global
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about your specific circumstances.
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