In today’s business environment, it is essential that companies take steps to prevent breaches of fiduciary duty. Though this may seem an impossible task in light of the diverse personalities and responsibilities involved in your company’s management, it is achievable through the application of thoughtful policies, training, and oversight.

Start with the simple step of developing and documenting clear policies and procedures. These should include a comprehensive code of ethics that outlines the expectations and responsibilities of every stakeholder in the company, especially those who have fiduciary duties. You should also have a clearly stated conflict of interest policy that requires full disclosure of any personal interests that would conflict with business decisions and require all employees to sign confidentiality agreements to protect proprietary or sensitive information.

Moving beyond policy, invest time into regular training, decision-making workshops, and education on fiduciary responsibilities. The information provided should provide the opportunity for employees to roleplay in real-world scenarios, as well as to understand the consequences of breaches of their fiduciary duties. Training sessions should also include updates on any changes to relevant laws.

Finally, stress the importance of oversight and monitoring to the board of directors, making sure that they understand their role in reviewing and assessing fiscal activities. Regular internal audits should become standardized and a compliance offer should be appointed to ensure that all policies are being adhered to and to investigate any questionable decision-making or potential breaches.

Encourage a culture of integrity through open communication, the establishment of consequences, for breaches, and rewards for ethical behavior and responsible actions. Create a whistleblower policy so that employees know they will be protected for reporting unethical behavior and establish an open-door policy where they can feel free to discuss any concerns they may have.

Finally, take steps to establish a robust risk management policy that includes regular analysis of vulnerabilities and strategies for addressing them. Depending upon your circumstances, consider liability insurance against potential losses from breaches.

A breach of fiduciary duty by an employee or stakeholder can have devastating consequences for your business. You can significantly reduce your risk and improve the overall ethical standing of your company by implementing smart, proactive strategies. Contact our firm today for additional assistance in addressing concerns about a potential breach of fiduciary duties.