ICAEW: Risk reporting not a silver bullet
Monday 17 October 2011 - by Karina Whalley
A leading accountancy body has proposed seven principles to help improve risk reporting, but warned clients not to expect miracles in preventing business failure.
Although Hodgkinson acknowledges that variation exists across national risk reporting requirements, he said there are some common principles that could make it more objective and useful.
The report proposes that firms provide information that allows users to make their own assessment of risk. It also says quantitative information would be more beneficial than long, descriptive risk lists.
Other proposals include the integration of risk information with other disclosures and the updating of information on changes in key risks more frequently than once a year.
Hodgkinson however emphasised the fallibility of reporting, saying: "With the benefit of hindsight, people wonder why firms failed to foresee a problem, and can forget that the future is always full of unknowns, including 'unknown unknowns'."
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