Proposed Accounting Treatment for Risk Units (RUs) and Tokenized Risk Units (TRUs)

This paper presents a detailed accounting treatment proposal for Risk Units (RUs) and Tokenized Risk Units (TRUs), exploring how quantified non-financial risk can be integrated into financial reporting using existing IFRS standards, including IFRS 8, IFRS 9, and IAS 37.

The document examines multiple accounting approaches, ranging from disclosure-focused segment reporting to forward-looking expected-loss provisioning and traditional provisions for contingent liabilities. It explains how residual non-financial risks, once quantified as RUs, may be translated into monetary terms and reflected in financial statements, management reporting, and risk disclosures.

A substantial section is dedicated to Tokenized Risk Units (TRUs), analysing their accounting treatment from the perspectives of issuers, initial investors, secondary-market participants, and traders. The paper discusses recognition, measurement, valuation, income recognition, and disclosure considerations, while highlighting how TRU market design deliberately limits speculation and supports financial stability.

The paper also evaluates the regulatory, audit, valuation, and financial-stability implications of different accounting treatments, identifying both challenges and benefits. It concludes that, while implementation requires careful governance and standardization, integrating RUs and TRUs into accounting frameworks has the potential to materially improve transparency, comparability, and the proactive management of non-financial risk.

This document is intended for professional accountants, auditors, regulators, standard-setters, financial institutions, and policymakers interested in the practical integration of Risk Accounting into mainstream financial reporting.