When governance fails, the fallout doesn’t stop with the organization. It ripples into livelihoods, trust, and the peace of mind of those who depend on it.

If you sit on a board, advise one, or lead a team that reports to one, the question is not whether governance matters. It’s whether you will recognize when it begins to fail.

History shows that when governance becomes symbolic, consequences do not end with the crisis. They echo through the lives, livelihoods, and institutions the board was meant to protect.

When the crypto exchange FTX collapsed in November 2022, it was more than a financial failure. It was a case study in what happens when oversight is undervalued.

Billions of dollars in customer assets disappeared. Thousands of employees lost livelihoods. A once-celebrated founder was convicted of fraud and conspiracy and sentenced to decades in prison. By 2024, justice seemed served. Assets were being recovered, regulators promised tighter oversight, and the headlines quieted.

But in 2025 the story refuses to end because FTX is back in the news this month. 

The FTX Recovery Trust has frozen more than $500 million in creditor payouts across 49 countries.

Thousands of creditors, many of them small investors and employees, remain trapped in the long administrative and legal aftermath of FTX’s collapse. Their funds are tied up in the very complexity that sound oversight should have prevented.

That is the real cost of absent oversight. Even after justice has been served, the impact on lives continues as the long tail of bad governance causes damage.

The Long Tail of Bad Governance

The real story is not just about FTX. It is about what happens when governance fades into formality.  

Governance failure rarely erupts suddenly. It develops through stages that are easy to miss in the moment and difficult to correct later.

Across industries and decades, the same sequence repeats itself:what begins as symbolic leadership becomes habit, that habit shapes behavior, and behavior determines impact. Throughout this sequence, accountability waits to be acknowledged.

Even when no one in the moment seems to be held to account, the expectation of accountability never disappears.  It lingers ...in the system, amongst stakeholders, and in the conscience of those who led.

Eventually, it surfaces, annexed to the long tail of bad governance. And by then, it has become too unrelenting to be ignored.

The long tail of bad governance journeys through distinct stages.  I have categorized these as: the proxy, the pattern, the ripple, and the reckoning.  Let me now unpack these and explore the implications of each.  

1. The Proxy: When Leadership Presence Is Symbolic, Not Substantive

FTX had all the trappings of success: a charismatic founder, global investors, and a reputation for innovation.  What it lacked was a functioning board.

Court filings revealed there were no independent directors, no audit committee, and no formal structure for oversight. Founder Sam Bankman-Fried was the only board member of the main entity, while its affiliate, Alameda Research, had none.

John J. Ray III, the professional brought in to manage the bankruptcy, told Congress:

“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information.”

FTX is extreme, but it is also a proxy for many organizations whose boards exist in name but not in practice.

Absent governance does not always look like an empty room. Sometimes it looks like punctual meetings, thick board packs, and a culture that values harmony more than honesty.

When boards fail to ask difficult questions, oversight becomes ornamental, and collapse or marginalization becomes inevitable.

Insight:
The proxy stage exposes governance that looks legitimate but lacks conviction. It is where appearance replaces accountability and form overshadows function. The danger is subtle but damaging. Once governance becomes symbolic, integrity becomes optional.

2. The Pattern: When Avoidance Becomes Normalized

Every failure of oversight that is not addressed eventually becomes routine. It begins with unchecked confidence, grows through silence, and hardens into culture.

At this stage, board members and executives stop challenging assumptions. They grow comfortable with reports that confirm rather than question, and they normalize the absence of accountability.

For FTX’s creditors, the $500 million payout freeze means postponed rent, deferred tuition, and lost savings.

For citizens still grappling with the legacies of Clico and Finsac, it meant livelihoods destroyed, generational wealth erased, and decades of weakened trust in institutions that were meant to protect them.

Weak oversight, blurred accountability, and leadership shielded from consequence create the perfect conditions for governance to fail.

Insight:
The pattern stage marks the quiet decay of governance discipline. Avoidance becomes the accepted rhythm of board life, and the culture begins to reward conformity over courage. When that happens, governance no longer protects value. It endangers it.

3. The Ripple: When Consequences Extend Beyond The Boardroom

What happens in the boardroom rarely stays there.

Experience shows that the ripple effect of failed governance reaches far beyond the organization itself. FTX’s collapse shook global crypto markets. Clico and Finsac reshaped public confidence across entire economies.

When governance weakens, the risk to livelihoods spreads beyond the corporate balance sheet. The cost multiplies, especially touching those who trusted the decision-makers most.

That is why the tone set in the boardroom matters so deeply. It determines how integrity is practiced throughout the organization. It also shapes a climate that can strengthen or erode trust.

If curiosity in your boardroom has given way to complacency, or your leadership mistakes loyalty for oversight, act now. The ripples are already forming, and as for the waves that will follow, we already know where they are likely to land.

Insight:
The ripple stage is proof that governance is never a private matter. Every neglected decision carries a public cost. The farther the ripples reach, the more visible the gap between stated values and practiced accountability becomes.

4. The Reckoning: When Consequences Finally Demand Accountability

The true test of a board’s readiness to serve is evidenced not in how it reacts to crisis, but in what it does to prevent one.

When oversight collapses, accountability does not disappear. It shifts. It moves from those who caused the harm to those left to clean it up:  the courts, regulators, taxpayers, and the public.

FTX’s ongoing legal gridlock is one example of that transfer, and the same dynamic has haunted Clico and Finsac for years.

Here we see that once trust is broken, recovery becomes both technical and emotional. And we risk squandering our legitimacy, which usually takes years to build and even longer to rebuild when lost.

Poor governance hurts people, and managing its consequences cannot be postponed. Oversight must therefore be proactive, not performative.

Insight:
The reckoning stage is where governance failure meets consequence. It is the point where systems catch up with neglect, and every decision that once escaped scrutiny finally finds it. This is the moment of truth for leaders, and too often, it arrives too late.

Closing Reflection

FTX did not collapse because one person made poor choices. It collapsed because no one was positioned or empowered to stop him.

When the discipline of challenge is absent, the seeds of long-tail governance impact are sown.

For today’s boards and executives, the call is clear:

• The practice of good governance must be your priority. It provides the ethical infrastructure to protect people who may never enter the boardroom but who live with the consequences of its decisions.

• Your engagement in oversight must be active. Distance yourself from any loyalties or practices that weaken accountability.

• Integrity must be institutional. Systems, not personalities, preserve trust.

Once governance fails, fallout is inevitable, but reaching that point is preventable.

The long tail of governance brings either a cuddle or a sting.  The cuddle compounds trust, resilience, and confidence. The sting, on the other hand, brings harm, cynicism, and loss, as seen in FTX, Finsac, and Clico.

So if your board has a habit of not showing up, you can bank on this: it may not be today’s crisis, but it may just be what keeps you awake at night sometime in the future.  

Thank you for reading.  

I said: I wanted to give you an outcome that was comprehensive, informed by the standards, and could be used as a framework to guide this and future preparations.

She responded: That's the approach I would expect from you and I advocated for the engagement on that basis.

Bold Leadership. Ethical Governance. Meaningful Impact. That's the charge. Carry it Forward!

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