Companies need to improve their reporting on business risks and avoid being too bland, generic, wordy or biased, according to the Association of Chartered Certified Accountants (ACCA).

Ewan Willars, the ACCA’s policy director, said, “There are concerns that risk reporting is currently seen as being “tick-box” and process-driven, with organisations reluctant to be frank. It was also felt that there was too little or no challenges from boards, auditors or investors about the potentially damaging ‘what-ifs’ that could destroy businesses.”

He said a compilation of views of senior professionals by the ACCA shows that risk reporting needs improvement. However, there is disagreement over how to best balance the needs of investors and other users of reports with what organisations are willing to disclose that would not give competitors an advantage or alarm stakeholders.

The compilation report states that risk information in current company reports is either difficult to find or too unspecific to be of significant use. Willars said, “Report users we surveyed, including analysts, called for risk reports to clearly identify key risks faced by a company, with an explanation of why management believes these risks to be critical and what they are doing to mitigate them.

“A good report should identify new and emerging risks and explain how management assesses them throughout the year.”

The ACCA, in its report, urged proactive involvement in risk reporting to encourage better practice. “Good risk reporting, in turn, gives investors greater confidence,” it added.