I have a fair amount of accounting / legal / governance knowledge and as part of my board commitments think it’s a lot less relevant than deeply understanding the mission and strategy of the relevant organization (along with other more relevant generalist skills like management, HR, etc.). Edit: Though I do think if you’re tied up in the decade’s biggest bankruptcy, legal knowledge is actually really useful, but this seems more like a one-off weird situation.
It seems intuitive that your chances of ending up in a one off weird situation are reduced if you have people who understand the risks properly in advance. I think a lot of what people with technical expertise do on Boards is reduce blind spots.
I think that’s false; I think the FTX bankruptcy was hard to anticipate or prevent (despite warning flags), and accepting FTX money was the right judgment call ex ante.
I think Jack’s point was that having some technical expertise reduces the odds of a Bad Situation happening at a general level, not that it would have prevented exposure to the FTX bankruptcy specifically.
If one really does not want technical expertise on the board, a possible alternative is hiring someone with the right background to serve as in-house counsel, corporate secretary, or a similar role—and then listening to that person. Of course, that costs money.
It’s clear to me that the pre-FTX collapse EVF board, at least, needed more “lawyers/accountants/governance” expertise. If someone had been there to insist on good governance norms, I don’t believe that statutory inquiry would likely have been opened—at a minimum it would have been narrower. Given the very low base rate of SIs, I conclude that the external evidence suggests the EVF UK board was very weak in legal/accounting/governance etc. capabilities.
I have a fair amount of accounting / legal / governance knowledge and as part of my board commitments think it’s a lot less relevant than deeply understanding the mission and strategy of the relevant organization (along with other more relevant generalist skills like management, HR, etc.). Edit: Though I do think if you’re tied up in the decade’s biggest bankruptcy, legal knowledge is actually really useful, but this seems more like a one-off weird situation.
It seems intuitive that your chances of ending up in a one off weird situation are reduced if you have people who understand the risks properly in advance. I think a lot of what people with technical expertise do on Boards is reduce blind spots.
I think that’s false; I think the FTX bankruptcy was hard to anticipate or prevent (despite warning flags), and accepting FTX money was the right judgment call ex ante.
I think Jack’s point was that having some technical expertise reduces the odds of a Bad Situation happening at a general level, not that it would have prevented exposure to the FTX bankruptcy specifically.
If one really does not want technical expertise on the board, a possible alternative is hiring someone with the right background to serve as in-house counsel, corporate secretary, or a similar role—and then listening to that person. Of course, that costs money.
I read his comment differently, but I’ll stop engaging now as I don’t really have time for this many follow-ups, sorry!
It’s clear to me that the pre-FTX collapse EVF board, at least, needed more “lawyers/accountants/governance” expertise. If someone had been there to insist on good governance norms, I don’t believe that statutory inquiry would likely have been opened—at a minimum it would have been narrower. Given the very low base rate of SIs, I conclude that the external evidence suggests the EVF UK board was very weak in legal/accounting/governance etc. capabilities.