Following the completion of its third progress report the FSB announces that the EDTF’s work is complete.
Improving Risk Disclosures
The global financial crisis heightened the desirability for banks to publicly disclose their exposures to certain instruments that the marketplace now considers to be high risk or to involve more risk than previously thought, including collateralised debt obligations (CDOs), residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS), other special purpose entities (SPEs), and leveraged finance. In response, many financial firms have enhanced their disclosures of these exposures. High quality risk disclosures contribute to financial stability by providing investors and other market participants with a better understanding of firms’ risk exposures and risk management practices.
The FSB published in March 2011 the results of a Thematic Review on Risk Disclosure Practices that highlighted the continuing importance of high quality risk disclosures that contribute to financial stability by providing investors and other market participants with a better understanding of firms’ risk exposures and risk management practices. Following that report, the FSB facilitated the establishment of the Enhanced Disclosure Task Force (EDTF), a private sector group of preparers, auditors and users of banks’ financial statements. In October 2012, the FSB published the EDTF’s report Enhancing the Risk Disclosures of Banks which included a series of Principles and Recommendations for banks’ risk disclosures. At the FSB’s request, the EDTF in 2013 undertook a survey of the extent of implementation in banks’ 2012 financial statements, and further surveys were conducted in 2014 and 2015. The three surveys showed an increase in the number of banks that implemented the recommendations plus the extent and quality of implementation, as a result the EDTF was disbanded.
The FSB encourages banks to continue to strive to improve risk disclosures, and calls on supervisory authorities to take steps to foster awareness of the EDTF Principles and Recommendations by banks and markets in their national jurisdictions.
Key Documents
Third progress report on the implementation on the recommendations from the Enhanced Disclosure Task Force.
The third report prepared by Enhanced Disclosure Task Force presents the progress made in application of the recommendations in its first report Enhancing the Risk Disclosures of Banks, October 2012.
The EDTF provided a second progress report on the level and quality of implementation of the EDTF Principles and Recommendations.
This report provides seven fundamental principles for enhancing the risk disclosures of banks.
18 March 2011
This thematic review assesses implementation of these recommendations by the 24 FSB member jurisdictions and by the major financial institutions located in those jurisdictions.
