Revisiting the Caremark Doctrine: What Today’s Compliance Officers Must Know

According to Tom Fox in an article on the Compliance Podcast Network, the Caremark Doctrine remains a cornerstone of corporate governance, shaping board-level oversight obligations in ways that risk and compliance professionals must continually reassess. 

First articulated in the 1996 Delaware Chancery Court case In re Caremark International Inc. Derivative Litigation, the doctrine transformed passive board oversight into an affirmative duty. Directors must not only establish effective compliance systems but also ensure they are regularly monitored and responsive to any red flags that may arise. Ignorance or negligence is no longer a defense; directors are liable for what they knew or should have known.

In the years since, the doctrine has gained new traction, particularly through cases Fox highlights, such as Marchand v. Barnhill, which underscore the need for heightened attention to “mission-critical” risks. Compliance professionals, in turn, must support boards by ensuring robust monitoring systems are in place, aligning oversight to core business risks, and fostering a culture where ethical conduct is institutionalized and visible at every level.

Fox says directors are now expected to actively engage with compliance information, scrutinize risk reports, and participate in regular, targeted training. Boards must also document these efforts to demonstrate diligence in the face of regulatory or shareholder scrutiny. As outlined in Itai Fiegenbaum’s 2025 analysis, this heightened standard necessitates a proactive and strategic approach.

Ultimately, the Caremark Doctrine’s enduring influence reaffirms a fundamental truth: effective compliance isn’t just about rules and procedures but about leadership, accountability, and vigilance. Compliance officers who understand and operationalize these evolving expectations are essential to protecting both their organizations and their boards from liability.