Operational Risk Disclosure in Financial Services Firms

Ford, Guy; Sundmacher, Maike; Finch, Nigel; Carlin, Tyrone M.

doi:10.1002/9781118267066.ch18

Cited by 7 publications

(4 citation statements)

References 5 publications

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“…Meanwhile many experts and scholars still see the requirements of the Basel capital accords (Basel I, II and III) and IFRS (IAS 32, IFRS7 and IFRS 9), as being very general and qualitative in nature, although considered as an important step towards enhancing risk disclosure in banks (Barakat & Hussainey, 2013;Ford, Sundmacher, Finch, & Carlin, 2009). Thus, the occurrence of the financial crisis of 2007/08 and the associated credit crunch, it was shown that the capital regulation of Basel II might be insufficient to strengthen the banking sector's transparency.…”

Section: Risk Disclosure In Banksmentioning

confidence: 99%

The impact of multi-layer governance on bank risk disclosure in emerging markets: the case of Middle East and North Africa

et al. 2019

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This study examines the impact of multi-layer governance mechanisms on the level of bank risk disclosure. Using a large dataset from 14 Middle East and North Africa (MENA) countries over a period of 8 years, our findings are threefold. First, our results suggest that the presence of a Sharia supervisory board is positively associated with the level of risk disclosure. Second and at the bank-level, we find that ownership structures have a positive effect on the level of risk disclosure. At the country-level, our evidence suggests that control of corruption has a positive effect on the level of bank risk disclosure. Our study is, therefore, a major departure from much of the existing accounting literature that offers new crucial insights that show that firms' disclosure choices are not mainly shaped by firm-level (internal) governance arrangements, but also country-level (external) governance and religious factors. Our findings have important implications for corporate boards, investors, regulatory authorities, standards-setters and governments relating to the development, implementation and enforcement of corporate and national governance standards.

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Section: Risk Disclosure In Banksmentioning

confidence: 99%

The impact of multi-layer governance on bank risk disclosure in emerging markets: the case of Middle East and North Africa

et al. 2019

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“…This research focuses on operational risk, as it has been one of the most-debated issues among researchers and financial experts since the global crisis (Barakat and Hussainey 2013). The issue is growing in line with the emergence of operational risk as one of the fundamental sources of banks' bankruptcy (Ford et al 2009).…”

Section: Introductionmentioning

confidence: 99%

Risk governance, market competition and operational risk disclosure quality: a study of the ASEAN-5 banking sector

Karyani¹,

Kolade²,

Dewo³

2021

JOP

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This paper investigates the impact of risk governance and market competition on banks' operational risk disclosure (ORD) quality (total and voluntary) in the Association of Southeast Asian Nations (ASEAN-5) banking sector. Using 285 firmyear observations encompassing the period 2010-14 for risk governance indexes, we investigate the moderating effects of market competition, relative to total risk governance practices, on banks' ORD quality. The results of our panel data analysis show that there is a substitution effect of competition, which could reduce the adverse consequences of weak risk governance practices. However, governance factors -such as the chief risk officer's (CRO's) role and independence, and the risk communication system -decrease voluntary ORD quality. These findings have implications for the role of the financial regulator in using market competition as an effective mechanism to replace banks' weak risk governance, thus encouraging banks to improve their

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“…Thus, companies usually do not want to identify or disclose particularly dramatic situations that may negatively affect their image and induce investor uncertainty. According to Ford et al (2009), the required disclosures about operational risk exposures remain very limited and the quantitative measurement methods are still largely untapped. However, based on the signalling theory, if we suppose that this view becomes very well supported as a general signalling perspective, ORD would be expected of companies wishing to distinguish themselves in the market by indicating their ability to manage risks as well as ward off unwanted attention from the regulatory authorities.…”

Section: Risk Reporting Appraisalmentioning

confidence: 99%

Risk reporting appraisal in post-revolutionary Tunisia

Hemrit

2018

JFRA

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Purpose This paper aims to investigate the determinants of operational and liquidity risk reporting for the Tunisian insurance and banking sectors after the outbreak of the Tunisian revolution on 14 January 2011. Design/methodology/approach A manual content analysis approach was used to measure risk disclosure by counting the number of risk-related words within risk-related sentences in a wide range of publications. Findings The results show that operational risk disclosure is associated positively with operational losses frequency, institution size and the proportion of independent non-executive members of the board of directors. Also, board size is found to be negatively associated with risk disclosure. Moreover, net stable funding ratio, size and proportion of independent non-executive members have a positive effect on liquidity risk disclosure. The authors also discover that infrequency of board meetings and the presence of young members on the board increase the extent of liquidity risk information. Research limitations/implications The research focuses on a small number of observations which somewhat restrict the generalization of results to the entire class of financial sector in Tunisia. Also, the qualitative character of some supposed explanatory variables (frequency and severity of operational risk) relies heavily on the experiences of interviewees and their basic perceptions. Practical implications Investors might do well to rely on such characteristics (large board size, less active board and a high proportion of non-executive directors) to predict the disclosure of risk information, either operational or liquidity risk. Board members should keep an eye on reporting on risk, by promoting the success keys of governance, because good corporate governance has to be recognizable at first to be an effective value driver. Originality/value The findings rationalize the debate over the impact of improved corporate governance on risk disclosure practices within the context of the Tunisian revolution. The logic of this rationalization may help to promote political incentives that will encourage a risk management culture based on a dynamic communication framework.

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Operational Risk Disclosure in Financial Services Firms

Cited by 7 publications

References 5 publications

The impact of multi-layer governance on bank risk disclosure in emerging markets: the case of Middle East and North Africa

The impact of multi-layer governance on bank risk disclosure in emerging markets: the case of Middle East and North Africa

Risk governance, market competition and operational risk disclosure quality: a study of the ASEAN-5 banking sector

Risk reporting appraisal in post-revolutionary Tunisia

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