This ACCA report examines how the quality and value of risk reporting can be improved. It reviews current practice in risk reporting, the barriers to better risk reporting, the wishes of users, and the concerns of preparers.
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.
A new ACCA report provides business leaders with innovative guidance on the path to cultural assessment and change. Corporate scandals such as the recent Libor scandal have revealed how tougher regulation proved unsuccessful in preventing dysfunctional behaviour from spreading and thriving businesses from collapsing.
Many now believe that poor corporate culture is at the heart of the issue and that drastic change is needed to restore public trust in business. However, culture is not derived from a mechanistic patter that can simply be changed at will; a quantitative approach will at best capture the tip of a much bigger iceberg. This report provides another solution.