The importance to market confidence of useful disclosure by financial institutions of their risk exposures and risk management practices has been underscored in recent years. The FSB has agreed to take steps to encourage improved disclosures as described in this press release.
In December 2011, the FSB hosted a roundtable on risk disclosures by financial institutions to encourage the private sector to jointly take forward development of principles and of leading practice disclosures that will be relevant and informative given current market conditions and risks.
Eighty-two senior officials and other experts from around the world took part in the roundtable, representing investors and analysts, asset managers, credit rating agencies, banks, insurance companies, audit firms, audit regulators, accounting and auditing standard setters, as well as prudential and market authorities.
The outcomes of the FSB roundtable, including participants’ views on key areas where risk disclosure practices should be enhanced, are summarised in the attached note.
Taking account of the views expressed at the roundtable and the recommendations set forth in a March 2011 FSB report on risk disclosures, the FSB agreed the following next steps:
- The FSB will facilitate the formation of a task force to develop principles for improved disclosures based on current market conditions and risks, including ways to enhance the comparability of disclosures. The task force will involve investors, financial institutions, and external auditors and will be requested to develop proposed principles later this year for implementation in connection with end-year 2012 annual reports.
- The task force will be encouraged to have dialogue with standard-setting bodies, such as the International Organization of Securities Commissions, the Basel Committee on Banking Supervision, the International Association of Insurance Supervisors, the International Accounting Standards Board, the US Financial Accounting Standards Board and the International Auditing and Assurance Standards Board, at key stages as it develops its recommendations and to report to the FSB.
- The FSB will also ask the task force to identify leading practice risk disclosures presented in annual reports for end-year 2011 based on broad risk areas such as those identified in the summary of the roundtable. The task force would be asked to report on these leading practice disclosures to the FSB in 2012.
- The FSB will consider holding another international roundtable in late 2012 to facilitate further discussion by investors, financial institutions, auditors, standard setters, regulators and supervisors on market conditions and risks at that time and the progress toward improving the transparency of risks and risk management through relevant disclosures.
As the March 2011 FSB report noted, should the follow-up actions by the private sector not result in sufficient progress in this area, the appropriate international standard-setting bodies will be asked to take forward work to consider principles.