IASB Proposes Risk Mitigation Accounting Model for Banks

The International Accounting Standards Board (IASB) has proposed a new risk mitigation accounting model that could give investors greater transparency into how banks manage portfolio-level risks such as interest-rate movements.

The IASB has opened a public consultation on the proposal, which could result in amendments to IFRS 9 Financial Instruments and related IFRS 7 disclosure requirements.

IASB chair Andreas Barckow said the aim of risk mitigation accounting is to better align financial reporting with how banks actually manage risk across portfolios, rather than relying on a largely transaction-by-transaction view that can obscure overall exposures.

The consultation will run until 31 July 2026, and any changes would likely be implemented only after two years or more, subject to regulatory endorsement in each jurisdiction. The proposed accounting model would be optional for banks.