Special
OPERATIONAL RISK
Sharpening the saw Operational risk disclosures need sharpening up if banks are to cut the mustard under the disclosure regime that starts in 2022 BY CAMILLE FRADIN AND DAVID LANNOY
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isk managers might not be in charge of taking business or strategic decisions, but they are critical contributors to the decisionmaking process. Their role should offer insights that will maximise the chance to protect and create value in their organisations. While we would believe that risk managers are good communicators, we have identified concerns in the current risk disclosure practices of companies. We have found that risk disclosures are dispersed throughout reports, that disclosures vary in quantity and quality, that the disclosures often use generic language, and that disclosures lack focus on actions that are to be undertaken. This suggests that many risk managers are not taking advantage of the positive effects of drafting good risk management disclosures. Nor do they make visible the actions taken to reduce risk exposure to shareholders in order to gain trust – or make their risk management more transparent to increase organisational legitimacy.
Many risk managers are not taking advantage of the positive effects of drafting good risk management disclosures
Crucial driver Those firms with growing market shares tend to give more consistent and rigorous risk disclosures to prove
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Enterprise Risk
