Would Your Board Survive a Fiduciary Challenge?






Board Fiduciary Stress Test | Touch Stone Publishers


Board fiduciary stress test — self-assessment for independent directors

Touch Stone Publishers

Would your board survive
a fiduciary challenge?

The Delaware standard most directors don’t know they’re failing

In 2019, the Delaware Supreme Court allowed a derivative suit against the board of Blue Bell Creameries to proceed. The board had not ignored food safety. It had a program, management reported on it, and the board received briefings. The Court found the board had no committee-level reporting structure proportionate to the mission-criticality of the risk. What the board could prove was attendance. Not oversight.

Replace food safety with AI governance. The question the Delaware Court of Chancery will ask is not whether your board approved a policy. The question is whether your board had a documented system to know what was happening inside every AI system your company operated.

Why this assessment matters now: In 2023, the Delaware Court of Chancery extended Caremark liability to corporate officers individually. The SEC adopted mandatory AI disclosure rules requiring documented board oversight. Proxy advisors began scoring AI governance as a standalone director criterion. These three developments mean the gap between what your board approved and what it can prove is now examined simultaneously by courts, regulators, and institutional investors.

The Delaware Caremark standard evaluates whether the board adequately oversaw management. That means the board’s oversight record is examined independently of what management did. An assessment produced for the company answers a different question. This assessment was produced for the board chair and the independent directors. Its purpose is an accurate picture of your personal fiduciary position, not a result that protects the company. Complete it alone. Answer based on what your board can prove to a plaintiff’s attorney who has subpoenaed your minutes, not what you believe is in place.

Scoring

Yes — 4
The practice is documented to the Delaware evidence standard
Undocumented — 1
The practice may exist, but your board cannot prove it. Under Delaware law, undocumented and nonexistent are the same.
No — 0
The practice does not exist

If your honest answer is uncertain, score it Undocumented. The standard does not accommodate uncertainty.

The question this assessment answers
If a Delaware Court of Chancery reviewed your board minutes, committee charters, escalation protocols, and management reporting structures from the past 24 months, would it conclude that your board had a functioning, documented system in place to monitor AI risk at the level the risk required?
That is the Caremark question. Every scored question below operationalizes it. Your score on those questions tells you how your board would fare if a court asked it.

0 of 14 answered