Corporate risk disclosure and regulations in the age of COVID-19
How are companies and governments responding to the global pandemic?
Since the COVID-19 outbreak began, companies have been responding quickly and transparently to the risks presented by the crisis in their formal disclosures.
Datamaran’s AI engine automatically tracks corporate disclosures and initiatives, as well as regulatory developments, in order to provide corporate decision-makers with reliable information in the face of uncertainty.
This page is a public snapshot of the insights gained from Datamaran's COVID-19 Disclosures and Regulations Tracker, illustrating early trends and developments related to regulatory initiatives and corporate financial disclosures. The latter is a gateway to meaningful analysis of corporate responsiveness and preparedness, focused on different risk management stages and the specific mitigation areas companies have been addressing.
Percentage of US and European Annual Financial Reporting Mentioning Coronaviruses (2011-2020)
A Datamaran analysis of data so far in 2020 shows that 44% of US companies and 57% of European ones have acknowledged the novel coronavirus in their financial reporting - signalling the immediate understanding of the topic being material to business.
Non-uniform reporting cycles will likely explain much of the difference, as European companies typically file their annual reports later than 10-K submissions. The stronger guidance from ESMA advising European companies to provide substantive Covid-19 disclosures in their annual financial reports may also be influential.
Analyzing corporate disclosure: different industries at different risk stages
By looking at the different risk management stages disclosed by companies - from identification to assessment, mitigation and ultimately, monitoring - we can better understand corporate preparedness, responsiveness and the specific actions taken.
While proportionally more companies are including risk mitigation efforts in their annual reports than those filing 10-Ks, the proportion of companies not making any acknowledgement of the coronavirus crisis in their annual report is significantly higher.
While proportionally more companies are including risk mitigation efforts in their annual reports than those filing 10-Ks, the proportion of companies not making any acknowledgment of the coronavirus crisis in their annual report is significantly higher.
It wasn't until the start of March that we saw more substantive COVID-19 disclosures in 10-K filings, with a marked spike in the number of companies making tangible risk assessments and disclosing mitigation areas (see the graph below).
We also see differences across sectors. Early reporters in certain sectors, such as Consumer Goods, and Food & Beverage, are reporting a high proportion of specific risk mitigation activities.
Transparency around mitigation activities not only reassures investors, regulators, and others that the company is proactively addressing the impact of COVID-19, but also indicates their preparedness for a potentially worsening situation.
Coronavirus-related regulations vary across the globe
Governments have reacted quickly, adopting emergency legislation that aims to protect both public health and the economy. While such measures were by and large designed with a temporary nature in mind, governments have begun to extend them, some indefinitely.
Common factors of governmental intervention around the globe include limiting freedom of movement; closing commerce with the exception of ‘critical infrastructure’ e.g. supermarkets and pharmacies; closing educational establishments; providing paid leave to people affected by the pandemic; provisions and protocols for healthcare workers and treatments; and economic support for unemployment and small- to medium-sized business.
Discover Datamaran’s live COVID-19 Disclosure and Regulation Tracker
The above research is a snapshot taken from a Datamaran’s live COVID-19 disclosure and regulation Tracker.
Thanks to AI technology, this tracker is automatically updated on a weekly basis, giving you immediate access to reliable insights into regulatory and financial reporting developments with a focus on risk management practices.
The disclosure insights highlight the specific risk identification, assessment, mitigation and monitoring actions reported by companies.