Subject
As a part of the management accounting system and function, managerial risk accounting has the following two main purposes:
- decision-facilitating or decisions-making
- decision-influencing or stewardship
These purposes are achieved by providing respectively relevant information to improve the ability and willingness of the employees to achieve the organisations’s goals and objectives. For the purpose of decision facilitation, decision makers should be provided with an accounting representation of the state-act-outcome set of the decision. Especially, it is necessary to provide statements concerning the likelihood or probability of states and outcomes. For the purpose of stewardship, it is necessary to provide information on the risks taken and their relation to the risk bearing capability of organisation as well as their relationship to the return generated.
Read more about this topic: Managerial Risk Accounting
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