Risk Mitigation Accounting - Proposed amendments to IFRS 9 and IFRS 7
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New proposed accounting model for risk mitigation We want to hear your feedback on a new proposed accounting model — the Risk Mitigation Accounting model — that enables investors to understand the effect of a company’s dynamic risk management. The model’s development reflects information gathered from banks that use dynamic risk management for repricing risk due to changes in interest rate. Your comments will help inform our feedback to the IASB on its Exposure Draft Risk Mitigation Accounting - Proposed amendments to IFRS 9 and IFRS 7. |
Risk mitigation accounting for banks
Many companies use hedging to manage their exposure to financial risks such as changes in interest rates or commodity prices. NZ IFRS 9 Financial Instruments improved hedge accounting rules so companies could better reflect their risk management in financial reports.
However, these improvements do not work well when companies manage risk in a dynamic way — where the risk position changes often and is hedged with a constantly changing portfolio of assets and liabilities.
This means companies can find it hard to show their true risk management activities in their financial statements, making it difficult for investors to understand how hedging affects the company’s financial position and future cash flows. Without this understanding, investors may make poor decisions about a company’s profits and prospects, which can even affect wider economies.
The IASB has developed a new accounting model to help investors understand how companies manage dynamic risk — especially the risk from interest rate changes, which is common in the banking sector — and assess how effective that risk management is.
Your feedback is important
We encourage you to read the IASB Exposure Draft and to share your comments with us. More information on the consultation, as well as additional resources, can be found on the IASB's website here.
Your comments will help us ensure that, ultimately, NZ IFRS 9 provides for appropriate reporting outcomes for reporting entities in Aotearoa New Zealand.
Invitation for field testing
To ensure the proposed Risk Mitigation Accounting model meets the practical needs of banks in New Zealand, we invite banks to participate in field testing the new model and the requirements of the proposed standard.
Field testing would involve banks applying the proposals to their interest rate risk management processes in a simulated or parallel manner, separate from their actual financial reporting. Field testing will help identify potential challenges, provide insights into implementation, and assess the costs and benefits of adopting the proposed model.
If you are interested in participating or would like further details, please contact us at accounting@xrb.govt.nz.
How to provide feedback
XRB submissions close on Wednesday 20 May 2026.
You can send your comments directly to the IASB by Friday 31 July 2026. If you do, sending a copy of your submission to the XRB via accounting@xrb.govt.nz would be appreciated.
All submissions will be published on the XRB website unless confidentiality is requested. If you object to the release of any information in your submission, please identify the specific parts and the reasons under the Official Information Act 1982. We reserve the right not to publish defamatory submissions. Submissions are subject to the Official Information Act 1982 and the Privacy Act 2020. The XRB will handle personal information in accordance with these Acts.