Understanding Disclosure Management: A Comprehensive Guide
Many companies think disclosure management is a “last-mile” approach to compiling financial statements for required annual reporting. While financial disclosures are essential, they are not the only ones worth thinking about. Other disclosure examples include environmental reporting, social impact reporting, strategic plan reporting–the list is actually quite large.
Truly effective disclosure management is much easier to achieve through year-round best practices in documentation and communication. If you’ve ever had to pull together an annual report at the last minute, you might understand why this is the case. Tracking down all the necessary data, analyzing it, visualizing it, then supporting it with a great narrative–all takes time.
Maybe you’re reporting profits, losses, and dividends to your local securities commission or want to tell investors about the social impact of your work. In all cases, going the extra mile is easier when you don’t have to do all the work at the last minute. Let’s cover the different types of disclosures a company might need to make.Thankfully there is a data management tool that can help you do it all–whether you’re working months in advance or perfecting the details hours before a deadline.
Types of Disclosures
There are two main types of disclosures in business, voluntary and involuntary. A voluntary disclosure occurs when an organization chooses to share facts and narratives about their operations. An involuntary disclosure is information shared without the consent or knowledge of the business. For instance, if a shareholder leaves a closed annual meeting and makes a social media post about what they heard, this would be an involuntary disclosure.
Within the category of voluntary disclosures, there are many kinds of information a business might choose to share.
1. Financial Disclosures
These reports make known the profits, losses, and overall financial condition of the business.
2. Operations Disclosures
These reports make known the business activities, growth of the market share, company values, mission, and purpose, and other information about operations.
3. Strategic Disclosures
These reports make known the strategic goals and future plans, whether for the organization as a whole or specific departments or products.
4. Risk Disclosures
These reports analyze and make known risks to elements like employee retention, cybersecurity, compliance, sustainability, or other areas.
5. Narrative Disclosures
These reports make known the company’s side of the story about any of the above. Rather than a simple presentation of facts and figures, narrative disclosures also include masterful storytelling to guide the reader through the analysis of the facts to the desired outcomes and conclusions.
Based on the list above, it may already be obvious that some disclosures are intended to be shared with the public while others are for internal distribution only. Employees, shareholders, and investors certainly want, need, and are entitled to a lot more information than the company might want to make fully public. The need for these different streams of reporting to all be handled appropriately and efficiently is one reason disclosure management is so important! With tools like Fluence Disclosure Management, reports are easier than ever to create and collaborate on, meaning more efficient high-quality reporting is possible.
What Is the Purpose of Disclosure?
Businesses make corporate disclosures to share facts. Sometimes these disclosures are internal, while in other cases they are shared with the investors or the general public. Why is corporate disclosure important? There are a few reasons.
Increased Value to the Public and Shareholders
All types of disclosures are valuable assets against public mistrust and misconceptions. For instance, only 21% of global consumers trust large companies with their personal data. A voluntary disclosure about information security, known risks, and the plans to address them can go a long way toward helping one organization stand out against the competition. On the flip side, global consumers are four times more likely to buy from a brand with strong social purpose, and six times more likely to defend the brand in moments of crisis. Public disclosures about the positive impacts of charity work can strengthen the perceptions of your company’s purpose in the eyes of the public and your shareholders.
Improved Transparency and Compliance
Corporate disclosures also improve transparency and communication with government agencies and accrediting bodies. Reporting on financials, disclosures about environmental and social impact, and assessment of risks may be required by institutions like the European Securities and Markets Authority, the United States Securities and Exchange Commission, the Canadian Securities Exchange, and others. The purpose of these disclosures is to protect the public as well as ensure the business is keeping track of important information.
Changes in Managerial Behavior and Organizational Governance:
When the employees of an organization are aware of their activities and the outcomes are the subject of disclosure, it can change their behavior. Especially in highly-regulated industries or departments seeking to improve compliance, voluntary internal reporting can set these standards and expectations even when public disclosures are not required by law.
What Is a Disclosure Management Tool? Redefining Efficiency in Corporate Intelligence and Disclosures
Disclosure management tools are software platforms which help organizations collaboratively create, manage, and deliver any kind of corporate disclosure. The Fluence Disclosure Management tool comes packed with features such as:
- Kick-start the creation of any disclosure document by importing a previous report.
- Microsoft Office and Office Online integrations allow you to work seamlessly with the Excel, Word, and PowerPoint infrastructure.
- Multi-language functionality as a native feature for efficient global collaboration.
- Dedicated and secure hosting on your own turf, whether through your own Azure instance or a data center near you.
- A truly robust InDesign integration to enable design by the vendor or employee of your choosing.
- Tagging such as iXBRL block tagging and ready for future ESG tagging.
The Fluence Disclosure Management platform has truly transformed the efficiency of disclosure management processes at every client we serve. It is our mission to help you take the complicated and make it simple. We know that the traditional reporting process is challenging at best, and believe you deserve a turnkey solution to more efficient collaboration. Our platform is designed to change along with your needs without compromising on quality and results. Learn more about our strategies to empower collaborative data collection and corporate intelligence, or contact us today to schedule a demo and get hands-on to see how this product can make your life easier.