Risk disclosure: An exploratory study of UK and Canadian banks

Abstract

It is important that stakeholders receive relevant information to be able to understand the risk profile of any financial firm they have an interest in. This study examines risk disclosure practices within annual reports of Canadian and UK banks; these being chosen because of the relatively advanced state of the risk disclosure debate within the respective countries. The paper analyses and classifies the risk information communicated by the sample banks and discusses the nature of the risk disclosures. The usefulness of current disclosures is questioned as relatively little quantitative risk information is disclosed and there is a very strong bias towards disclosing past rather than future risk-related information. Risk disclosure is still evolving within the academic literature and therefore suggestions are made for further empirical research.