3.3 IFRS and operational risk

Whilst International Financial Reporting Standards (IFRS) apply significant disclosure requirements for financial risks, they are less prescriptive when it comes to operational risk. In explaining its decision to limit required disclosure on operational risk, the International Accounting Standards Board (IASB) states that ‘the definition and measurement of operational risk are in their infancy’ and decided to ‘defer this issue to its research project on management commentary’ (IASB 2010, p. B534). While operational risk may be in its infancy in general, for certain industries such as banking, it is much more advanced and disclosure is typically required by regulators in the notes to the financial reports.