Under Caremark, corporate directors are to ensure that the operating staff of a business review and understand contingent risks, and that coping plans are in place – see Professor Bainbridge’s article for specifics. So, how would you feel if you were a director of Carnival Cruise lines, which apparently is failing badly in coping with the highly foreseeable possibility of losing some or all power and other services aboard a cruise ship? And, how big is Carnival’s reputation risk loss with this fiasco as a follow-up to last year’s Concordia disaster, and large amounts of subsequent litigation against Carnival.
Conclusion? Contingency planning really is needed. Just ask BP.