Banks have completed their first round of viability statement reporting. Vincent Papa reviews the reports of five big firms.
Encouraging transparent and robust risk communication by financial services firms is the holy grail for financial reporting authorities and investors. Mandated viability statements are the latest tool aimed at improving risk disclosures, but the jury is still out over how much impact they will have.
As was evident during the financial crisis, clearer risk reporting by banks could have helped to provide an early warning system of their financial health and enabled investors to exercise market discipline. As noted in the 2012 Enhanced Disclosure Task Force report, there is a risk premium associated with the lack of transparent risk reporting.