At its meeting on May 23-27, 2022, the IASB met for final deliberations on the key challenges identified during meetings with preparers. The DRM model is intended to enable an entity to better reflect its dynamic risk management strategy in its financial statements and provide useful information to users of financial statements. The IASB tentatively decided to change the mechanics of the DRM model to require: (i) designated derivatives to be measured at fair value in the statement of financial position; (ii) the DRM adjustment to be recognized in the statement of financial position, as the lower of (in absolute amounts): (a) the cumulative gain or loss on the designated derivatives from the inception of the DRM model; and (b) the cumulative change in the fair value of the risk mitigation intention attributable to the repricing risk from inception of the DRM model (which would be calculated using the benchmark derivatives as a proxy); and (iii) the net gain or loss from the designated derivatives calculated in accordance with (i) and the DRM adjustment calculated in accordance with (ii) to be recognized in the statement of profit or loss. The IASB decided to add the Dynamic Risk Management project to its standard-setting program; and continue using the expertise of advisory bodies instead of establishing a dedicated consultative group for the project. At a future meeting, the IASB will discuss the detailed project proposal, setting out the specific areas for deliberation and potential time line.

Review the IASB Update and podcast on the Board's Web site.