The State of the Art on Corporate Risk Disclosure: A Systematic Literature Review

Abstract

This article reviews the academic literature on corporate risk disclosure, focusing on non- financial risks in the European regulatory context, particularly considering the Non-Financial Reporting Directive (NFRD) and Corporate Sustainability Reporting Directive (CSRD). Through a systematic review of 140 scientific papers, this study pinpoints key drivers and trends in corporate risk disclosure, such as regulatory compliance, stakeholder pressure, and emerging technologies. Our literature review suggests that while the NFRD has engendered an improvement in the quality and quantity of non- financial risk reporting, firms still tend to focus on past and present risks, with limited forward-looking or negative risk information. Furthermore, this article underscores gaps in current literature, such as the lack of focus on developing countries, financial-sector companies, and the infrequent use of qualitative research methodologies. The paper concludes by recommending a multi-theoretical framework and further investigation into the usefulness of non-financial risk disclosures for investors and other stakeholders.

Keywords: risk disclosure, risk reporting, non-financial risks, Non-Financial Reporting Directive, Corporate Sustainability Reporting Directive

JEL Classification: M49