Enhancing quality of information through risk reporting in financial statements

Mirela Nichita
2018 Proceedings of the International Conference on Business Excellence  
When we bring in discussion risk, we think about danger, loss or other unfavorable consequences. In accounting and in finance area, the concept of risk is related to a wide range of terms, such as: cost - volume analysis, decision trees, discounted cash flows, capital assets pricing models, and the newly hedging concept. Effective risk management relates to risk assessment; risk evaluation; risk treatment; and risk reporting. Risk management highlights the actions that the entity takes in order
more » ... tity takes in order to be prepared for any negative event. The objective of risk management is not to prevent or eliminate taking risk, but is to ensure that the risks is taken with complete knowledge and clear understanding so that it can be measured to help in mitigation. The paper will emphasizes a short evolution about accounting qualitative characteristics and how these features may conduct to a more transparent reporting and a balanced risk management processes. A key principle of comprehensive risk management is risk transparency, both in terms of internal risk reporting as well as external disclosure for users of information in making decision process.
doi:10.2478/picbe-2018-0060 fatcat:2xwaygo23fdh3o2hjaosgtr7pa