Financial Reporting Lab reveals that risk reporting has improved but investors want to know whether disclosed risks are general or “specific” to the company.
More improvements could be made to the reporting of risk, according to a UK watchdog, though investors say they have seen progress in both reporting and engagement since the financial crisis. A new report says investors seek more disclosures on principle risks and viability. In particular investors want to know how principle risks are assessed and the kind of stress-testing that has been carried out to support their viability reports. The reports point out that investors want to know whether risks identified are specific to the company or general, and how a company prioritises risks. Investors also want clarity on how companies explain the movement in a risk's priority, particularly if it drops out of the "principle risk" category.