The research paper “A test of the feasibility of a common risk accounting metric for enterprise risks”, authored by Peter Hughes (Visiting Fellow, Durham University Business School) and Professor Julian Williams (Chair in Accounting and Finance, Durham University Business School), was recently published in the Journal of Risk Management in Financial Institutions.
The paper describes how researchers used the Risk Accounting method to convert US banks’ accounting (US GAAP) data into risk data in the form of RUs. Correlations between risk data in RUs and unexpected losses were then examined to conclude whether the RUs presented greater predictive properties than accounting (US GAAP) data. In other words, could risk reporting in RUs have prevented the global financial crisis of 2007/8.
You can read or download the paper from below (embedded document, it may take a while to load):