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Managing the complexity and volume of disclosure requirements under IFRS 9 and understanding expectations

By Simone la Fortezza, FVP Group Credit Risk Governance – IFRS 9 Program Leader, UniCredit 

Simone, can you please tell the Risk Insights readers a little bit about yourself, your experiences and what your current professional focus is?

In my career I have been working on a wide range of banking topics across Europe, first as a strategy management consultant, then as part of some of the major Italian banking groups. I have been developing my main skills in the area of Corporate Business, Risk Management and M&A integration. My last focus has been the IFRS9 conversion program, that I am still leading in its post execution phase in order to fine tune the complex methodologies and processes around it and to support managing its business, financial and operational effects.

 What, for you, are the benefits of attending a conference like the ‘IFRS 9 Summit’?

A conference like the ‘IFRS 9 Summit’ gives the unique opportunity to the audience to get in touch with several managers and professionals highly involved on the topic who have learned by their own experience the main challenges driven by and the appropriate solutions to the complexity of the new standard.

 What are the key considerations that need to be made when creating a process of reporting, managing complexity and increasing efficiency?

Setting up a reporting process under IFRS9 involves more complexity, activities and costs than what was required before. By simply adding up all new activities and controls required to the existing process you may end up increasing you reporting timeline by up to 50%! Efficiency is therefore critical as reporting deadlines do not change and transparency stays key to let your internal stakeholders, your auditors and finally the market understand the soundness of your disclosure and the key drivers of specific phenomena (e.g. volatility compared to previous financial reports, results sensitivity to changing macroeconomic scenarios, etc).

Simone la Fortezza
Simone la Fortezza

 In your opinion, how important is making disclosures more comparable across the industry, and why?

The importance of making disclosures more comparable across the industry is huge, since the understanding of both the financial analysts and the investors on how a financial institution is performing compared to others will influence investment decisions and banks’ reputation.

 How do you see the impact of IFRS 9 evolving over the next 6-12 months?

The main impact of IFRS9 in the next months will definitely be on business management, credit operations and related processes (pricing management, risk appetite, monitoring, etc.). As a matter of fact the new standard is an even bigger incentive for the business to take into consideration risk management aspects when defining and applying business strategy, since it directly impacts budget targets, and an incentive for the whole financial institution to keep internal processes as aligned as possible to better manage or mitigate impacts driven by the new standards.