Aligning Enterprise Risk Management into Risk Disclosure of the IPO Prospectus

Abstract

This concept paper aims to review the potential of aligning Enterprise Risk Management (ERM) elements into risk disclosure of the IPO prospectus. This concept paper explores the potential for aligning ERM elements within the risk disclosure section of IPO prospectuses. The paper emphasizes the regulatory requirement of the risk disclosure in the prospectus. It highlights the importance of risk disclosure in investment decision-making. It contends the best practices of risk disclosure in the IPO prospectus for the benefit of investors and also reinforces the issuing company’s commitment to effective risk management and corporate governance. By incorporating ERM principles, the prospectus not only improves transparency but also strengthens the issuing company’s commitment to effective risk management and corporate governance. The key research objective is to evaluate the integration of ERM into IPO risk disclosures, with particular emphasis on regulatory compliance, investor decision-making, and the enhancement of corporate governance practices. This research endeavors to fill the gap in the literature by enhancing the ERM elements in the existing practices of IPO disclosure.