van de Ven, Arco --- "Risk Management from an Accounting Perspective" [2010] ELECD 577; in van Daelen, Marijn; Van der Elst, Christoph (eds), "Risk Management and Corporate Governance" (Edward Elgar Publishing, 2010)

Book Title: Risk Management and Corporate Governance

Editor(s): van Daelen, Marijn; Van der Elst, Christoph

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849803953

Section: Chapter 2

Section Title: Risk Management from an Accounting Perspective

Author(s): van de Ven, Arco

Number of pages: 49

Extract:

2. Risk management from an
accounting perspective
Arco van de Ven

2.1 DEVELOPMENT OF RISK MANAGEMENT AND
ACCOUNTING

2.1.1 Introduction

The history of risk management and accounting is a story of transparency,
standardization and attestation. The risks to which these requirements
are applied and their form have changed over the years. Transparency,
standardization and attestation have been recurring topics, which have
been put forward as means to reduce the risk of misappropriation of cor-
porate funds, misstatement of financial reports or the risk of ineffective
and inefficient controls or too-risky strategies.
Transparency, in the form of disclosing accounting information, has
given shareholders insight into the financial affairs of the company.
Accounting regulation has been made over time to force management to
disclose financial information. In the 17th century the Dutch East India
Company (VOC) was forced by shareholders to publish balance sheet
statements and profit and loss statements. Over the years, the call for
transparency of financial figures has evolved into a demand for disclosure
of company specific information. Companies nowadays not only have to
give an insight into their financial affairs, they also have to be transparent
about the effectiveness of their internal control systems, their risk appetite
and which risks their organization faces.
The call for transparency implies independent audits. How do stake-
holders know that the companies information can be relied upon?
Reports alone are not enough; they have to be attested. The need for
independent attestation to assure the reliability of information ...