The Fallible CEO

Businesses spend endless hours preparing for external perils such as fires, recessions, or even climate change. But the biggest danger for many companies could sit right in the corner office.

Call it key man risk, a real worry in an age when chief executive officers can be synonymous with the enterprises they lead. If a founder fails to appreciate the importance of privacy to his customers (Facebook) or a leader’s death exposes previously overlooked holes in a corporate strategy (Fiat Chrysler), that spells trouble. It’s even worse when an executive makes racially insensitive remarks (Papa John’s) or a CEO is accused of inappropriate sexual behavior (CBS). That can send investors heading for the exits.