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What sort of risks to be disclosed?

What are the risks that we need to disclose in our financial statements? Do we need to disclose our operational risk?

asked May 14, 2013 in IFRS 7 - Financial Instruments: Disclosures by anonymous

1 Answer

+1 vote
Mainly 03 types of risks. That is market risk, credit risk & liquidity risk.

Market Risk refers to the risk that the fair value or cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk reflects interest rate risk, currency risk and other price risks.
Disclosures about market risk should include:
-a sensitivity analysis of each type of market risk to which the entity is exposed
-additional information if the sensitivity analysis is not representative of the entity's risk exposure

Credit Risk refers to the risk that one party to a financial instrument will cause a loss for the other party by failing to pay for its obligation.
Disclosures about credit risk should include
-maximum amount of exposure (before deducting the value of collateral),
-description of collateral, information about credit quality of financial assets that are neither past due nor impaired,
-information about credit quality of financial assets whose terms have been renegotiated
-for financial assets that are past due or impaired, analytical disclosures are required
-information about collateral or other credit enhancements obtained or called

Liquidity Risk refers to the risk that an entity will have difficulties in paying its financial liabilities.
Disclosures about liquidity risk should include
-a maturity analysis of financial liabilities
-description of approach to risk management
answered May 29, 2013 by anonymous