The International Accounting Standards Board (IASB), an independent standard-setting body for accounting rules, has launched a consultation on a new risk mitigation accounting model aimed at improving how banks report and manage financial risks. The consultation, open until July 31, 2026, could result in changes to IFRS 9 Financial Instruments and IFRS 7 disclosure requirements.
The proposed model seeks to provide investors with a more complete view of banks’ exposures by moving beyond a transaction-driven approach to interest rate risk. Andreas Barckow, IASB Chair, stated, “Our proposed risk mitigation accounting model aims to bring accounting and risk management closer together to enhance internal efficiency and strengthen communication between financial institutions and their stakeholders.”
The initiative follows years of dialogue between the IASB and banks seeking greater flexibility in how risk management strategies are reflected in financial statements. Barckow emphasized that the model would better align accounting standards with actual risk management practices. “We want to better understand how banks are managing their risk, and can we use our toolbox of accounting standards to faithfully portray what they are doing,” he said.
By providing a clearer and more comprehensive view of risk exposures, the IASB aims to improve transparency for investors while supporting internal efficiency within banks. The consultation represents a significant step toward bridging the gap between regulatory reporting and real-world financial risk management.
