Risk in financial reporting: status, challenges and suggested directions
AbstractAdvances in risk measurement technology have reshaped financial markets and the functioning of the financial system. More recently, they have been reshaping the prudential framework. Looking forward, they have the potential to reshape financial reporting too. Recent initiatives to improve financial reporting standards have brought to the fore significant differences in perspective between accounting standard setters and prudential authorities. Building on previous work, we argue that risk measurement and management technology can be instrumental in bridging this gap and, by the same token, in improving financial reporting. Risk measurement plays a crucial role in the measurement, verification and validation of valuations. It is the basis for giving more prominence to risk and measurement error information in public disclosures. And it could act as more of a focal point in the design of accounting standards, as greater consistency between sound risk management practices and accounting standards can help to narrow the wedge between accounting and underlying economic valuations.
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Bibliographic InfoPaper provided by Bank for International Settlements in its series BIS Working Papers with number 213.
Length: 28 pages
Date of creation: Aug 2006
Date of revision:
risk measurement and management; accounting; regulation; financial reporting;
Find related papers by JEL classification:
- D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
- G00 - Financial Economics - - General - - - General
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
This paper has been announced in the following NEP Reports:
- NEP-ACC-2007-06-18 (Accounting & Auditing)
- NEP-ALL-2007-06-18 (All new papers)
- NEP-CFN-2007-06-18 (Corporate Finance)
- NEP-HIS-2007-06-18 (Business, Economic & Financial History)
- NEP-REG-2007-06-18 (Regulation)
- NEP-RMG-2007-06-18 (Risk Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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