Risk appetite is defined as the broad-based amount of risk an entity is willing to accept in the pursuit of its vision (COSO, 2004). Starting from this definition, the present paper aims to investigate entities’ ability and willingness to define and disclose their risk appetite, focusing in the banking industry where it should especially be part of decision-making processes in the pursuing of such entities’ mission. Both the quality and the focus of risk appetite disclosure are examined in different banks’ reports. The results emphasize the role of banks’ integrating reporting in defining and assessing risk appetite, comparing this disclosure with that provided in annual reports (of a matched sample) and in banks’ specific documentation about risks (Pillar 3 reports). Preliminary results show an increasing amount of RA information in all reports (Integrated Reports, Annual reports, Pillar 3) along the years. Moreover, in line with agency and signalling theories’ expectations, risk appetite disclosure quality – i.e. disclosure completeness, tone, temporal perspective – is found to be higher in Integrated Reports than in annual reports.

Risk Appetite in Banks’ Reports

Chiara Mio;Marisa Agostini;Silvia Panfilo
2019

Abstract

Risk appetite is defined as the broad-based amount of risk an entity is willing to accept in the pursuit of its vision (COSO, 2004). Starting from this definition, the present paper aims to investigate entities’ ability and willingness to define and disclose their risk appetite, focusing in the banking industry where it should especially be part of decision-making processes in the pursuing of such entities’ mission. Both the quality and the focus of risk appetite disclosure are examined in different banks’ reports. The results emphasize the role of banks’ integrating reporting in defining and assessing risk appetite, comparing this disclosure with that provided in annual reports (of a matched sample) and in banks’ specific documentation about risks (Pillar 3 reports). Preliminary results show an increasing amount of RA information in all reports (Integrated Reports, Annual reports, Pillar 3) along the years. Moreover, in line with agency and signalling theories’ expectations, risk appetite disclosure quality – i.e. disclosure completeness, tone, temporal perspective – is found to be higher in Integrated Reports than in annual reports.
Identità, innovazione e impatto dell’aziendalismo italiano. Dentro l’economia digitale
File in questo prodotto:
File Dimensione Formato  
Aidea2019.pdf

non disponibili

Tipologia: Versione dell'editore
Licenza: Accesso chiuso-personale
Dimensione 5.74 MB
Formato Adobe PDF
5.74 MB Adobe PDF   Visualizza/Apri

I documenti in ARCA sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/10278/3721002
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? ND
social impact