There is a growing agreement among users, preparers and advisers that risk reporting needs to improve; better risk reporting is integral to better governance. The question of how best to balance what investors and other users want to see in a risk report with what organisations are willing to disclose, however, remains to be answered. In particular, organisations are reluctant to disclose anything that might threaten competitive advantage or to discuss potential risks in detail in case this alarms stakeholders (especially providers of finance). The result, too often, is a boilerplate, generic risk report that serves no one’s interest. Shareholders and stakeholders are entitled to better information.
In 2014, ACCA conducted research to identify how the quality and value of risk reporting can be improved. Through a series of interviews with investors and regulators, as well as preparers of risk reports, the research examined current practice in risk reporting, the barriers to better risk reporting, the wishes of users, and the concerns of preparers. This report summarises the main messages that emerged.
It is clear that, as a discipline, risk reporting is still evolving and that users and preparers are still negotiating what the former want to know and what the latter want to provide. We hope that this report helps to inform that debate.