The concept of corporate risk: perspectives of risk disclosure users and preparers

The concept of risk has evolved from a pre-modern understanding, where it was viewed solely as uncertainty with negative outcomes, to a modern perspective that encompasses both negative and positive outcomes. Despite ongoing debates in the literature, there is no universally accepted definition of risk. Drawing on Saussure’s linguistic theory and Wittgenstein’s (2005) philosophy, this study examines how specific groups within the community perceive risk and the potential reasons behind differing interpretations. Using a case study approach, the research focuses on practitioners with an interest in a UK bank (Bank A). Interviews were conducted with risk reporting analysts, regulators, investors, and managers at Bank A. The findings suggest that definitions of corporate risk are shaped by the practices and procedures specific to each group directly affected, rather than a unified understanding. It is crucial, therefore, to evaluate and incorporate these differing perspectives during the implementation of accounting regulations. While all participants described risk as the uncertainties associated with both expected and unexpected events, their views diverged on the effects and implications of these events, which could result in either positive or negative outcomes. Thus, risk transcends both pre-modern and modern views and cannot be fully understood without considering the conceptual meanings and subjective judgments of those directly involved.