There’s been a lot of news about conflicts of interest (COIs) this year. And just this week the Senate’s Subcommittee on Investigations issued a 43-page memo about Elon Musk’s conflicts as an advisor to President Trump. The memo, based on publicly available data, found Musk and his companies were “subject to a least 65 actual or potential” conflicts. Since Musk is the CEO or board member of at least four companies, one which is publicly traded (Tesla), the implications of COIs for both shareholders and boards are very real considerations.

People commonly think they know what a conflict of interest is. And many do. But what a lot of people don’t consider is the different types of COIs and how they might be compounded. Conflicts of interest exist whether or not they are recognized by the party creating the conflict or the party harmed by it, according to researchers who studied over 8,000 analysts’ rating of equities. The study revealed that analysts tend to rate their clients’ securities higher than non-clients or other analysts rating the same securities.

COIs can be boiled down to two types: the actual conflict, in which a party in a position of trust fails in its obligation to serve in another’s interest; and a potential conflict where there is a mere presence of a conflict to fulfill an obligation even though the party may or may not have failed in its obligation. In the memo from the Senate’s Subcommittee on Investigations, both types are looked at.

The first type of conflict – actual –can be seen as an initial conflict of interest between two parties. But when those two parties engage with other unaware parties, it could result in a compound conflict where the presence of the initial conflict is transferred and then amplified among multiple parties, committing a further wrong.

One of the clearest ideas about when COIs occur and who has them is John Boatright. In particular, lawyers, financial advisors, and doctors have conflicts of interest if their personal motivation is at odds with their professional responsibilities. Looked at this way, COIs can exist among many types of professions – or any type of role that requires that we not use our self-interest to guide our decisions but instead aim to be independent, impartial and unbiased. Michael Davis and Andrew Stark have mapped out conflicts in multiple professions as varied as journalism, accounting, the law and even the film industry.

Boards of directors have this type of role – especially given their fiduciary duty – where a board member’s personal or financial interests may interfere with their ability to act in the best interests of the organization. The requirement of independence by many stock exchanges is at the center of potential conflicts. There are cases of well known, established public companies having directors who have contributed a great deal of funding, 25 years ago, and are still on the board and considered independent.

Recusing yourself is one option for either actual or potential COIs, as Musk said he will do in a recent interview. But often resignations are seen as a more effective way to preserve the integrity of the company and board. Such resignations have occurred at Roche, Google and Starbucks.

Actual or potential COIs can be damaging to the reputation of company shareholders, clients, regulators and other stakeholders. They can also lead to regulatory sanctions and even criminal prosecutions. Boards can create a policy and monitor conflicts regularly as well as watch out for early signs of potential conflicts among members.