The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.
The risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.
The risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.
Maturity analysis for financial liabilities that shows the remaining contractual maturities – Appendix B10A – B11F
Time bands and increment are based on the entities’ judgement
How liquidity risk is managed.
Maximum exposure to credit risk without taking into account collateral
Collateral held as security and other credit enhancements
Information of financial assets that are either past due (when a counterparty has failed to make a payment when contractually due) or impaired
Information about collateral and other credit enhancements obtained.
A sensitivity analysis (including methods and assumptions used) for each type of market risk exposed, showing impact on profit or loss and equity
If a sensitivity analysis is prepared by an entity, showing interdepen-dencies between risk variables and it is used to manage financial risks, it can be used in place of the above sensitivity analysis.
Fair value hierarchy
All financial instruments measured at fair value must be classified into the levels below (that reflect how fair value has been determined):
Level 1: Quoted prices, in active markets
Level 2: Level 1 quoted prices are not available but fair value is based on observable market data
Level 3: Inputs that are not based on observable market data.
A financial Instrument will be categorised based on the lowest level of any one of the inputs
used for its valuation.
The following disclosures are also required:
Significant transfers of financial instruments between each category – and reasons why
For level 3, a reconciliation between opening and closing balances, incorporating; gains/losses, purchases/sales/settlements, transfers
Amount of gains/losses and where they are included in profit and loss
For level 3, if changing one or more inputs to a reasonably possible alternative would result in a significant change in FV, disclose this fact.
Transfer of financial assets
Information for transferred assets that are and that are not derecognised in their entirety:
Information to understand the relationship between financial assets and associated liabilities that are not derecognised in their entirety
Information to evaluate the nature and risk associated with the entities continuing involvement in derecognised assets (IFRS 7.42A-G).