Background

The IASB is working on a project to simplify and improve the usefulness of financial statements by developing accounting requirements for hedging within the context of open portfolios that are more closely aligned with a company's risk management activities. The project addresses situations in which entities use a dynamic risk management strategy to manage their risks.

In December 2025, the IASB published the Exposure Draft Risk Mitigation Accounting, which is open for comment until 31 July 2026.

The IASB also invites companies that manage repricing risk on a net basis to carry out fieldwork during the comment period.

Risk mitigation Accounting (‘RMA’)

In preparation for the Exposure Draft on Risk Mitigation Accounting (formerly known as Dynamic Risk Management), in May 2025 EFRAG launched a survey focusing on current practices in dynamic interest rate risk management. View survey results

EFRAG Draft Comment Letter on RMA

EFRAG has published its Draft Comment Letter ('DCL') on the IASB's Exposure Draft (ED’) Risk Mitigation Accounting-Proposed amendments to IFRS 9 and IFRS 7 (‘RMA’). Stakeholders are invited to comment on EFRAG’s DCL by 22 June 2026.

At this stage, EFRAG has not formed a tentative position on several aspects and is seeking further evidence and feedback before finalising its response to the IASB. To this end, the DCL sets out a series of questions for constituents, which will inform EFRAG’s final views.

On the objective of RMA, some stakeholders see merit in considering both a faithful representation to reflect an entity’s risk management activities and eliminating accounting mismatches to be equal objectives of RMA. EFRAG notes that if the primary objective of RMA is for an entity to faithfully reflect its repricing risk management activities, EFRAG questions why certain financial instruments would be excluded from being eligible to be included in the underlying portfolios. This includes, for instance, financial assets measured at fair value through profit or loss, which are managed as part of an entity’s interest risk management strategy.

While significant uncertainties exist as to how the risk mitigation adjustment excess test should be performed in practice, EFRAG suggests that additional guidance on the indicators would be very useful.

Furthermore, views among constituents are mixed on the proposed effective date of the RMA model and on when IAS 39 should be withdrawn. There is, however, broad agreement that the transition period should be relatively long.

Additionally, EFRAG generally welcomes the proposed disclosure requirements, as these would be a significant improvement compared to current IFRS Accounting requirements, particularly for those applying the EU IAS 39 carve-out.

Finally, EFRAG emphasises the importance of developing an accounting solution that better reflects the dynamic interest rate risk management of entities issuing insurance contracts as per IFRS 17, compared to current requirements.

History

April 2014 | 2014 IASB Discussion Paper (DP)

On 17 April 2014, the IASB published its Discussion Paper, Accounting for Dynamic Risk Management: A Portfolio Revaluation Approach to Macro Hedging. Under this approach, the risk-managed exposures would be revalued with respect to the managed risk (e.g. three-month LIBOR) and the resulting revaluation adjustment would be recognised in the statement of financial position and the income statement. The revaluation adjustment and the fair value of the risk management instruments offset each other to the extent that the hedge is effective. Open risk positions would thus have a net impact on profit or loss, depending on the scope of the proposals.

October 2014 | EFRAG final comment letter on IASB 2014 Discussion Paper (DP)

EFRAG issued its final comment letter on 30 October 2014. In that letter, EFRAG highlighted the needs of different industries for a macro hedge accounting solution.

EFRAG rejected the alternatives proposed by the DP as remeasuring all portfolios that are dynamically managed was not considered decision-useful. In addition, such a solution would result in overriding the amortised cost measurement attribute. EFRAG asked the IASB to develop a hedge accounting solution with the aim of addressing the accounting mismatch between fair valued hedging derivatives and hedged items at amortised cost. In addition, macro hedging should remain consistent with IFRS 9. Further, a cash flow hedge model was advised to consider as banks manage their interest rate risk on a cash flow basis, not on a fair value basis. Finally, EFRAG noted that an impact assessment is needed during further development of the approach.

Dynamic Risk Management: Core Model

EFRAG, in co-operation with the IASB, conducted outreach on the practical implications of the IASB's core model during Q4 2020 and Q1 2021. In Q2 2021, both organisations provided feedback on the outreach.

The IASB had been discussing the feedback received and the IASB staff's proposals for changes to the core model and decided to move the project into the standard-setting phase. The next step was therefore to be an Exposure Draft ('ED') rather than a further Discussion Paper.

In 2022, the IASB had educational webcasts on the dynamic risk management model.

In October 2024, the IASB finalised its deliberations, which focused on extending the core model.

The IASB then issued an Exposure Draft on Risk Mitigation Accounting in December 2025.