Under the German hazard decision doctrine, no manager acts reasonably, whether a bank officer or a board member, if the risks taken on the corporation's behalf would destroy the corporation should they be realized.
Source quote, verbatim
no manager, regardless of whether the manager is a bank officer or board member, acts reasonably if he or she takes on risks on behalf of the corporation that, if realized, will result in the demise of the cor- 130 poration
From
Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010), IV.B.5. No Excessive Risk Taking, No Hazard Decision, p. 33 https://ssrn.com/abstract=1558614 · source PDF
Cite as
Painter and Kaal, Initial Reflections on an Evolving Standard Constraints on Risk Taking by Directors and Officers in (2010). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1558614
Holds when
German business judgment rule as elaborated in the ARAG decision of the Bundesgerichtshof
risk must be such that its realization ends the corporation
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