**3. Literature Review**

Risk has different notions and researchers have defined risk disclosure in different ways and contexts. Basically, risk disclosure is the communication of information concerning a firm's strategies, characteristics, operations, and other external factors that have the potential to affect expected results (Beretta and Bozzolan 2004). Firms incur different types of risks to attain their mission and aims throughout their life-cycle and management, and financial risks are among these (Lombardi et al. 2016). For our study, we have considered five categories of risks (i.e., capital structure risk, credit risk, liquidity risk, interest rate risk, and exchange risk) and the disclosure of these risks in annual reports. Several studies examine risk disclosure in developed countries including the United Kingdom (Linsley and Shrives 2006; Abraham and Cox 2007), Italy (Beretta and Bozzolan 2004), Canada (Lajili and <sup>Z</sup>éghal 2005), and Australia (Poskitt 2005). These studies address corporate overall risk with less emphasis on financial risk. Lombardi et al. (2016) examine financial risk disclosure in the setting of Italy by addressing the commodity price risk category.

In the context of Bangladesh, there are a few studies on corporate disclosure, including Akhtaruddin (2005); Hasan et al. (2008); Hasan et al. (2013); Das et al. (2015). Specifically, Akhtaruddin (2005); Hasan et al. (2008); and Das et al. (2015) investigate corporate mandatory disclosure, whereas Hasan et al. (2013) examine financial disclosure. These studies, while finding a positive association between corporate disclosure and financial attributes for firms in Bangladesh, do not directly address financial risk disclosure. Basically, financial risk disclosure practice started in Bangladesh after the adoption of IFRS-7 by the ICAB in 2010, hence its implementation is at an early stage. We contribute to the literature by providing an initial understanding and a portrait of financial risk disclosure practice in developing countries.
