Bridging the Documentation Void: A Quantitative Approach to Residual Liability (Lr) and Fiduciary Defensibility

Modern risk management standards, specifically ISO 31000:2018, provide a robust qualitative framework but lack a calibrated mathematical mechanism to account for the impactof documentation quality on legal defensibility. This paper introduces the Prouse ResidualLiability Model (Lr), which treats the Documentation Coefficient (Cd) as a primary multiplierof physical control effectiveness (Ce). By establishing the Prouse Forensic Index (PFI), thisresearch provides fiduciaries with a numerical metric to quantify their “Defensible Position”against emerging 2026 regulatory mandates. The findingssuggestthat a PFIscorebelow 40represents a “Forensically Fragile” state, nullifying the “Reasonably Practicable” defense andexposing directors to personal litigation.