ABSTRACT
The coronavirus crisis has seen numerous well-known businesses fail, contradicting what they wrote in their own 2019 financial statements. 10-K risk disclosures now are largely boilerplate lists, failing to provide any information about what really matters to stakeholders: the nature of the risks that the business faces, what are their probabilities, how management is mitigating those risks and, therefore, what is the residual risk of the business. On the other hand, it is only a matter of time before risk disclosures are tagged in detail using XBRL, as the rest of the 10-K has progressively become. The process of creating a XBRL risk taxonomy is an opportunity to introduce a standardized language that will enable companies to disclose voluntarily better information to stakeholders. The process of creating a truly comprehensive XBRL risk taxonomy can fill the gap left by the absence of “generally accepted principles” for risk measurement and disclosure.
