Is true reporting of risk in annual statements realistic?
Some members of FERMA’s board have queried whether true reporting of risk in annual statements is realistically achievable – or desirable.
Discussing risk management issues at a FERMA directors’ roundtable debate on Sunday, Paul Taylor, vice president and board member, said that a number of countries have requirements in terms of the information that companies have to report. However, he considered that much of the information actually reported was of little value.
‘Most of the information given is very generic. How many companies want to describe the key risks to their business and put them into an annual report which will be read by their competitors?’ he asked.
Fellow FERMA board member Jorge Luzzi agreed, also pointing out that such information could have an impact on share price.
Another FERMA director, Marie-Gemma Dequae, described the situation in France where companies are also expected to report on the insurance of their risks. However, this requirement is open to different interpretations. As FERMA president Peter den Dekker pointed out, companies will confirm that they are adequately insured in relation to the risks they are taking but they will not want to give detailed information on their policies and limits.
A full review of this roundtable debate, which was sponsored by ACE Europe, will be published in the next issue of StrategicRISK.