ABSTRACT
Today's business environment is often perceived as beset with risks and uncertainties with companies exposed to a wide range of internal and external risks. This chapter argues that it is incumbent upon companies to keep shareholders and other information users informed about their risk exposures and their risk management strategies, and that companies should also justify to investors in particular the rationale for taking particular risks. Accordingly, corporate risk disclosure (CRD) (or risk reporting) is a means for investors and stakeholders to be better informed about the risks a firm faces and how these are being managed. It is generally assumed that CRD is important as it aids stakeholders in assessing management performance by providing a picture of how well management manages risks and aids stakeholders in their decision-making by facilitating an assessment of the risk profile of the company. There is also growing empirical evidence on risk and risk management disclosure practices in different European countries.
