IFRS 7 - Financial Instruments: Disclosures is a standard issued by the International Accounting Standards Board (IASB) to outline the required disclosures for entities regarding their use of financial instruments. This standard was introduced to ensure transparency in the financial statements of entities that engage in transactions involving financial instruments and to provide useful information to users of these statements. It specifies the disclosure of information about the importance of financial instruments to an entity's financial position and performance as well as the risks associated with them.

The standard requires entities to provide qualitative and quantitative information regarding exposure to risks arising from financial instruments, including credit risk, liquidity risk, and market risk. For example, entities need to disclose a maturity analysis for financial liabilities that shows how they manage liquidity risk, as well as providing a sensitivity analysis for possible future changes in market conditions. The disclosures should also demonstrate how risks are managed and suggest the entity's approach to risk management.

Applying IFRS 7 helps users of financial statements to assess the risks related to financial instruments that an entity is exposed to and their impact on financial performance. For instance, a bank employing different types of financial derivatives to hedge risk is required to provide detailed disclosures about these derivatives and their risk management practices under IFRS 7.