Information based on how the entity manages risk (paragraphs 34 and B7)
BC47 The Board concluded that disclosures about an entity's exposure to risks arising from financial instruments should be required, and should be based on how the entity views and manages its risks, ie using the information provided to key management personnel (for example, its board of directors or chief executive officer). This approach:
(a) provides a useful insight into how the entity views and manages risk;
(b) results in information that has more predictive value than information based on assumptions and methods that management does not use, for instance, in considering the entity's ability to react to adverse situations;
(c) is more effective in adapting to changes in risk measurement and management techniques and developments in the external environment;
(d) has practical advantages for preparers of financial statements, because it allows them to use the data they use in managing risk; and
(e) is consiste
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