In this series I will share lessons learned about risks that crystallize when the «perfect storm» arrives, a case that illustrates the risks to which many entrepreneurs and executives are exposed due to the systemic risks of our societies; some experiences to learn about and prevent ourselves from the risks that can «sweep over us» in our latitudes. This will be a series of installments, in this one I will comment on general aspects of «responsibility».

«If something can go wrong, it will go wrong, the moment it does the most damage.»

Thinking of Murphy’s law applied to the business world, I also thought of the popular wisdom that dictates: «Risks cannot be eliminated, only managed,» – eliminating them is tantamount to business paralysis because nothing is zero risk – except inaction, which is also not true because it has its own risk of losing opportunities by doing nothing.

As the subject is complex, I decided to begin my reflections on the subject by launching isolated ideas in order to consider what can go wrong, in this chapter making a brief review of the legal aspects of liability, without giving it a legalistic or conceptual nuance -although everything has its legal basis, of course-,

Regarding liability: in general, in companies, the administrator is liable before the company, before the shareholders and before the creditors of the company, for any damages caused by his fault. If there are several administrators, the liability shall be joint and several. Modern criminal legislation also provides that legal entities will be liable in all cases in which, with their authorization or consent, their directors, managers, among others, participate and with some exceptions, leading the legal entity to be exempt from criminal charges if it proves that the directors and managers acted with fault or fraud, and can show that the company did not have any omission of control or supervision, or that any unlawful act was committed by decision of the decision-making body.

Do they notice the risk? It is key to determine those incidents that have criminal implications: who is responsible if there is a criminal matter, the administrators, the companies, both or neither, there could even be an apparent adversarial position between the administrators and the company itself in seeking to identify the responsible party.

Fortunately there is a light, also the legislations tend to include – as it is in Guatemala – the exemption from criminal liability when there is a fortuitous case, when there is no fault or fraud, when the officers and the companies have acted with due diligence fulfilling their duties of care and legal compliance, of ethical managerial judgment, as well as control, supervision and judicious decision making, leading to the fact that the element that gives harmony between the administrators and the companies is the due diligence in the fulfillment of the duties.

Given that the key issue is that there is no fault and to act with due diligence in compliance with their duties so that both companies and their directors and managers can be exempted from criminal liability – if any incident had occurred, this would be merely fortuitous -, it begs the question: is there a clear standard of due diligence to be fulfilled? who determines it? who examines it?

If we assume that the failure to comply with the standard leads a judge to penalize it, the key is to understand the scope of both the compliance system – understood as a tool for risk management and compliance duties – and the scope of the criminal system, which will be the framework within which it will be judged whether any act falls under any offence punishable by law.

To continue understanding the risks, here we will move towards two paths of reflection: compliance and the criminal system, which I will share in subsequent installments; for the time being I will let Murphy rest.

Second installment on the subject