Almost all entities disclose foreign exchange risk, interest rate risk, liquidity risk and credit risk as significant risk factors.

Survey findings

Consumer product companies in our survey showed the following trends about IFRS 7 disclosures.

• Almost all entities disclose foreign exchange risk, interest rate risk, liquidity risk and credit risk as significant risk factors. Only some entities present equity risks and commodity price risks as significant risk factors.
• Quantitative data is generally presented using a sensitivity analysis, although two entities surveyed have used a VaR analysis.
• Variations used for sensitivity analysis are regularly compared to observable market volatilities. A variation of 50 or 100 BP has developed as an implicit reporting standard for interest rate risks. Variations regarding equity prices and foreign exchange risks are less uniform amongst the entities surveyed.

Finding the right level of risk

IFRS 7 Financial Instruments: Disclosures requires entities to make disclosures about the significance of financial instruments to the entity's financial position and performance, and the nature and extent of risks arising from those financial instruments.

Our survey respondents identified the frequency of risk factors they consider, as illustrated below.

Frequency of risk factors considered

<< Previous | Next >>

Related content

• Eleven risks for global consumer products companies
  How well do you know the risks facing your business? We analyze the top 11 risks facing global consumer products companies in 2011 and beyond. Learn more and gain insights on how to respond to these challenges.
  
  
• Six steps for consumer product transactions in emerging markets
  The next billion consumer products customers are in emerging markets. How can you reach them? We've outlined the six steps to successful transactions, including the risks to avoid. Read our report today.

Contact us

• Contact one of our global consumer product leaders.