Three weeks later, an agreement that would have required 10 former WorldCom directors to pay $18 million out of their own pockets—representing more than 20 percent of their net worth—collapsed. As of presstime in early February, the directors were headed for trial in U.S. District Court. Led by the New York Common Retirement Fund, the lawsuit alleges that the directors, among others, failed in their obligation to investors to prevent the $11 billion accounting scandal that plunged WorldCom into bankruptcy in 2002.

These nearly unprecedented actions against directors have sent shockwaves through boardrooms across the world. Board members at all types of organizations—from large corporations to small nonprofits—are beginning to realize that perhaps D&O (directors and officers) insurance is no panacea. Directors are finding that, like Samuel Johnson’s prospect of being hanged in a fortnight, this concentrates their minds wonderfully on finding and eliminating risks that threaten their organizations—and their personal wealth, freedom and credibility.