Risk reporting: Clarity, relevance and location

Corporate risk reporting is important in helping investors assess the 
risk profile of a company and enables them to align holdings to suit their 
risk tolerance. Rules on risk disclosure in company reports are designed to 
improve transparency of information for investors. Any improvement in 
transparency should reduce market distortions and increase the efficiency 
of capital markets.

The amount of information disclosed by public listed companies has 
increased substantially over the past few years, partly due to regulation 
and partly due to the increase in voluntary information provided by these 
companies (Campbell and Slack, 2008). While the quantity of information 
has increased, questions have been raised over the quality of information 
disclosed (FRC, 2009, Campbell and Slack, 2008). 

To the best of our knowledge, this project is the first study to compare 
views of users and preparers of corporate information specifically on risk 
disclosure. This facilitates comparisons between the perceived usefulness 
of risk information from both a user and a preparer perspective, which 
is important in light of the communications gap, between companies 
and investors. 

The present study should be of interest to policy makers in 
formulating best practice and guidelines on risk reporting. The results 
will also be of direct interest to user groups such as investment analysts, 
individual shareholders and other stakeholders who rely on company 
reporting to make commercial decisions.