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 qual
itative framework but lack a calibrated mathematical mechanism to account for the impact
of documentation quality on legal defensibility. This paper introduces the Prouse Residual
Liability Model (Lr), which treats the Documentation Coefficient (Cd) as a primary multiplier
of physical control effectiveness (Ce). By establishing the Prouse Forensic Index (PFI), this
research provides fiduciaries with a numerical metric to quantify their “Defensible Position”
against emerging 2026 regulatory mandates. The findingssuggestthat a PFIscorebelow 40
represents a “Forensically Fragile” state, nullifying the “Reasonably Practicable” defense and
exposing directors to personal litigation.