In conversation after conversation about the current corporate governance climate, one company name comes up without fail: BP. On the surface, this is no surprise. The beleaguered petro-giant is in the thick of a corporate crisis of epic proportions, struggling to contain a massive oil leak and waging a high stakes PR battle at the same time; contending with criminal investigations even as it collaborates with the government on disaster response and remediation efforts. It’s every company’s worst nightmare, and a common refrain on the lips of governance experts is laced with humility and fear: “There but for the grace of God go I.”
What is surprising, however, is that when you think about it, the oil spill is outside the traditional domain of corporate governance. This isn’t a problem with accounting, auditing, reporting or other conventional facets of governance. There’s always the chance the recently opened criminal investigation into the BP disaster (see "DOJ launches investigation into the gulf oil disaster") will turn up some smoking gun memo that demonstrates a governance failure led to the calamity, but we don’t know that now, and probably won’t for years. So why is BP the governance poster child du jour?
In the governance landscape these days it’s easier to see the background than the foreground. Everyone understands the forces affecting corporate governance, but their impact is less distinct.
There is a chicken-and-egg question as to whether the increased media scrutiny of corporations is a result of egregious corporate behavior, or increased reports of egregious corporate behavior are a result of intensified media scrutiny. Either way, the public’s demand for accountability has never been higher, and that pressure inevitably is expressed politically.
Embedded in every question of the right process and structure to adopt are questions of how well each party is equipped to manage risk.
Traditionally, general counsel have had a lot of responsibilities in corporate governance but not a lot of authority. As the gatekeepers, the compliance gurus and reporting requirement experts, GCs were there to answer specific questions, advise the board on discrete matters and basically keep companies on the right side of the law.