# kaal:claim:1558614-026

**Claim.** 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.

**Type.** condition  **Support.** evidenced

**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

**Source quote.**

> 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, page 33

**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

**Verify.** sha256 of source PDF `e898211630f4116879329d6de8397523dca5b066864147421aa5cbc7429dc83b` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Painter%20and%20Kaal%20-%202010%20-%20Initial%20Reflections%20on%20an%20Evolving%20Standard%20Constraints%20on%20Risk%20Taking%20by%20Directors%20and%20Officers%20in.pdf

**Topics.** risk-and-incentives, systemic-risk

**Keywords.** hazard-decision, arag, german-corporate-law, excessive-risk, bank-managers

**Related claims.**

- restated_by: https://wulfkaal.github.io/claims/kaal-2013-acomparativeperspectiveo-013

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