As I have noted on this site in discussing artificial intelligence, among the risks and opportunities that the recent rapid emergence of AI represents for organizations of all kinds are the risks associated with AI-related regulatory oversight and supervision. Until now, references to AI-related regulatory concerns have mostly pertained to the EU’s Artificial Intelligence Act, which the European Parliament approved in March of this year. It is now clear that AI-related regulatory concerns likely will also extend to supervisory efforts of U.S. states as well, as reflected in the Colorado legislature’s May 8, 2024 passage of the Colorado Artificial Intelligence Act. This legislation, if signed into law by Colorado governor Jared Polis, would make Colorado the first U.S. state to enact comprehensive AI-related regulation.

As discussed below, the Act may or may not become law, but whether or not it does become law, it contains key signposts concerning the likely course of future AI-related regulation, as well as key AI risk management measures that well-advised companies will take to try to address their AI-related regulatory risk.Continue Reading Colorado Legislature Passes U.S.’s First State AI Regulatory Bill

From time to time, I am asked to speak directly to corporate boards of directors. I find these opportunities endlessly fascinating. Among other things, I learn so much from the directors’ questions. One frequently recurring question I get is:  what can directors do to avoid litigation or to be in a position better defend themselves if they are sued. The first thing I always talk about when asked these kinds of question is the importance of board minutes. Because this is one of my go-to talking points when I meet with boards, I was particularly pleased to see the recent post on the Harvard Law School Forum on Corporate Governance blog written by Leo E. Strine, Jr., the former Delaware Supreme Court Chief Justice and Chancellor, in which Strine highlights the importance of board minutes in corporate litigation. Strine’s comments are essential reading for anyone concerned with the liabilities of corporate directors. Strine’s April 4, 2024 article can be found here.Continue Reading The Importance of Board Minutes

Whenever the discussion turns to the question of emerging risks, among the first topics to come up these days is artificial intelligence (AI). But just as AI technology itself is still taking shape, the legal risks that the emergence of AI may present are still forming as well. On October 30, 2023, in what is unquestionably a key step in the development of a regulatory and legal framework for the administration of AI, the White House issued an Executive Order on the development and use of AI. The Order, which is entitled “Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence,” can be found here. At a minimum, the Executive Order has important implications for AI-related corporate risk management. The order may also point toward the future development of regulatory and legal standards pertaining to AI, as well as the litigation risks that AI may present.Continue Reading Thinking About Emerging AI Risks

Arlene Levitin
Bonnie Hoffman

In the current challenging economic circumstances, corporate directors and officers face a daunting array of potential liability exposures. In the following guest post, Arlene Levitin, Esq., Claims Officer, Complex Management Liability, NAS Financial Lines Claims, Liberty Mutual Insurance;, and  Bonnie Hoffman, Esq., Hangley Aronchick Segal Pudlin & Shiller, propose three ways that through careful planning directors and officers can reduce their potential liability risks. I would like to thank Arlene and Bonnie for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Arlene and Bonnie’s article.Continue Reading Guest Post: Planning for D&O Lawsuits: 3 Tips for Reducing Risks for Directors and Officers

Every now and then it is worthwhile to go back to the basics. In the following guest post, Greg Markel, Gina Ferrari, and Sarah Fedner, all of the Seyfarth Shaw law firm, review the basic building blocks of corporate governance duties and discuss ways for directors and boards to avoid violating the duties. I would like to thank the authors for allowing me to publish their article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is the authors’ article.Continue Reading Guest Post: Essential Corporate Governance Duties and How To Avoid Violating Them

Frank Hülsberg

Burkhard Fassbach

This past summer, the German legislature passed the Supply Chain Act, in order to require German businesses to comply with due diligence obligations to improve compliance with human rights and material standards within supply chains. In the following guest post, Frank Hülsberg, a Chartered Accountant and Tax Advisor in Düsseldorf, Partner Advisory and Member of the Executive Board at Grant Thornton AG Wirtschaftsprüfungsgesellschaft in Germany, and Burkhard Fassbach, a Senior Manager in the Governance, Risk, Compliance & Technology department at Grant Thornton in Frankfurt, review the Act’s requirements and consider its implications. I would like to thank Frank and Burkhard for allowing me to publish this article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Frank and Burkhard’s article.
Continue Reading Guest Post: Focus on ESG: The German Supply Chain Due Diligence Act

An important recent litigation phenomenon that I have been monitoring on this site is the recent revival of the duty of oversight as a legal theory on which plaintiffs can try to assert claims against corporate boards. Delaware’s court have recently sustained several of these kinds of claims – often referred to as “Caremark” claims in reference to the 1986 Delaware Court of Chancery decision that first recognized the legal theory behind these claims – and indeed on recent federal court decision sustained a breach of the duty of oversight claim under Ohio law. In light of these developments, boards will need to anticipate the possibility that these kinds of claims can arise, which possibility in turn raises the question of what boards can do to protect themselves from these kinds of claims.
Continue Reading The Duty of Oversight and the Need for Regular Board Review of Corporate Risk

Paul R. Bessette

Chris Crawford

As I have documented on this site, along with the rapid rise of SPAC-related transaction activity has come a surge in SPAC-related litigation. In the following guest post, Paul R. Bessette and Chris Crawford consider the likelihood for even further litigation relating to SPAC transactions and review the steps that well advised companies involved in SPAC transactions can take to try to reduce their litigation risks. Paul is co-chair of the King & Spalding law firm’s Corporate & Securities Litigation Practice and Chris is a Senior Vice President and Client Executive with Marsh in Los Angeles. A version of this article was previously published in Westlaw Today, 2021 WL 1990398. I would like to thank Paul and Chris for allowing me to publish their article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Paul and Chris’s article.
Continue Reading Guest Post: SPACs and SPAC-Related Litigation: A Primer on Reducing Litigation and Enforcement Risk

In February 2018, the SEC updated its cybersecurity disclosure guidelines for reporting companies, emphasizing the importance to investors and markets for prompt and robust disclosure relating to cyber issues. Indeed, in April, the agency brought its first enforcement action relating to cybersecurity enforcement issues. In its recent annual report, the agency’s enforcement division emphasized that cybersecurity disclosure is a priority issue. Clearly, public company’s cybersecurity-related disclosure practices are receiving a great deal of attention and scrutiny.

But what are public companies actually doing in terms of cybersecurity disclosures? A recent study by EY took a look at the actual cybersecurity disclosure practices. Their analysis shows that cybersecurity-related disclosure practices “vary widely,” suggesting there is an “opportunity for enhancement.” The October 22, 2018 report, entitled “Cybersecurity Disclosure Benchmarking,” can be found here.
Continue Reading Cybersecurity Disclosure Practices and Standards

It is axiomatic in the current global economy that every business needs to have a China strategy. Most business enterprises are drawn to the world’s most populous country and second-largest economy. But while China represents an attractive business marketplace, it can also in many respects be a perilous place to try to do business, particularly from a regulatory and compliance standpoint. While most businesses may recognize these challenges, many may struggle to try and address the concerns. A new book entitled “Governance, Risk and Compliance Management in China” (here), which I review below, may provide substantial help to companies trying to address compliance concerns arising from doing business in China. Of particular interest to this blog’s readers, the book includes an interesting chapter on D&O insurance issues in China.  
Continue Reading Book Review: Governance and Risk Management in China