In Search of Corporate Risk Measures to Complete Financial Reporting : The Case of the 'Caldarerie' - Industry

Corporate-risk has a very different nature from Market-risks: M-risks are generally exogenous so that they cannot be crafted, while C-risk is instead endogenous being the result of a continuous - time managerial process crafting inputs (e.g. specific risks) in order to let firm survive that is why the adoption of widely diffused risk model to understand the corporate risk drive to biased conclusions. The use of standardized XBRL financial data can hugely improve the information set about risk. The paper shows which measures could be mostly suitable to measure corporate risk exposure and how they can be coherent with the most traditional market risk indicators. An original model is proposed here by the Authors according to the inner results of a survey jointly developed by Giovani Imprenditori Confindustria and Allianz Group, while a methodology of its application is deployed referring to the very competitive Caldarerie (boiler) Industry. Results suggest the efficacy of the proposed methodology and trace possible improvements in XBLR information set to reduce asymmetries about the risk model adopted by corporation. Some further suggestions emerge about the capital structure theory, thus indicating possible evolutions to the next adoption financial analysis tools in the Basel-3 agreement framework