The risk of a write-down in the carrying value of an organization’s assets on its balance sheet. This is usually the result of a change in the carrying value under IFRS accounting rules. Impairment can arise from a variety of reasons including, but not limited to:

  • A material deterioration in the revenue, cash flow and earnings of the organization;
  • Material changes in long term growth rates, interest rates or other financial factors (prices or currencies) upon which a business valuation has been based;
  • Material changes to an organization’s business model or strategy, such as closure of a business, loss of a key contract or termination of a licence; or
  • A write off of capitalised development and other related expenses.